It's finally happened. The Big Three automakers are standing on common ground. Overcoming years of distrust and competitive juices, General Motors Corp., Ford Motor Co. and Chrysler Corp. have agreed to a single quality program - QS-9000. It superceds the current standard, ISO 9000 and is the most sweeping standardization system to hit the automotive industry since Henry Ford introduced mass production. Together the Big Three created a relatively easy-to-understand 96-page book, Quality System Requirements QS-9000, that they say will save suppliers and automakers loads of money and free up personnel to do advance quality planning.
It's also a necessity. Such conformity is very important because more non-product differentiating parts will be used collectively by the OEMS in the not-too-distant future, and one quality standard makes life simpler.
Still, Daniel Reid, manager-supplier development/supplier quality for GM Service Parts Operations, admits "it was shocking to see three logos together on the same book." He's been with the program since the Big Three decided to try to come up with standard quality requirements in 1988. During an American Society for Quality Control (ASQC) summer conference that year, suppliers made it clear to the automakers' purchasing czars that their multiple quality programs were "killing" them. Some suppliers had to prepare for 60 or 70 audits annually. That takes a lot of time, money and people.
These VPs, in turn, sanctioned a small group to study the nomenclature and individual company programs. "Find a basis for one standard," they were told.
First out was the common source warrant form, then came statistical process control (SPC) standards, among others. But, says Mr. Reid, "suppliers wanted to know, `can you do it quicker?"' They still were being harangued by the Big Three, each of which wanted their quality programs implemented now, if not sooner.
Although there was some early reluctance from top management, the group got its marching orders in December 1993 and had a first draft to the printers by March 1994. The goal was to keep it simple. Much of QS-9000 based on ISO 9000, with some additional requirements from the auto companies. The OEMS feel that suppliers with ISO certification shouldn't have far to go to reach QS-9000.
But, says Donna Parolini, president of International Business Development Corp supplier consulting firm in Grand Rapids, MI. European suppliers are falling behind because QS-9000 is not yet set up over there. "Those suppliers say ISO 9000 is the way to go, but if they globalize, it won't do anything for them. The OEMs need to be clear to the Europeans about what they need. They should have the book over there."
That should happen this month as the manual goes into its second printing, says Mr. Reid. Australia also gets it in May, Venezuela in August. He says the goal is to drop the cost from $15 today to $7 or $8 with the additional printing.
The new guideline incorporates Chrysler's Supplier Quality Assurance Manual, GM's North American Operations Targets For Excellence and GM Europe's General Quality Standard as well as Ford's Q101 Quality System Standard. Chrysler says, however, that it's Pentastar award stays, and GM will continue with its Suplier of the Year program. Ford strongly suggests its suppliers use kaizen continous improvement methods. The question Among Ford suppliers, says Ms. Parolini, is how many will sign up for kaizen? It's a lot of time and money, and it does not help a supplier go global, she says.
In the U.S., all first-tier suppliers must meet QS-9000. Chrysler and GM require third-party registration, Ford does not. Chrysler suppliers must be registered by July 31, 1997. GM requires certification by Dec. 31, 1997 for current first-tier suppliers, and Jan. 1, 1996 for new suppliers.
"We now have a single standard for all suppliers to the Big Three," says Russell M. Jacobs, manager-supplier quality and implementation at Chrysler. "Now we can commonize across the Big Three. It eliminates errors that might come about as a result of conversions dealing with a particular OEM. Documentation is reduced, and productivity will be enhanced because it (QS-9000) embraces all the latest technology and deals proactively with quality issues."
How much will productivity increase? It varies widely, Mr. Jacobs says, but adds that some suppliers have said for every $1 they put into quality systems to meet ISO 9000 requirements, they've gotten $10 back.
"The big thing (with QS-9000) is more top-to-bottom documentation from upper managers to (individuals such as) the shipping-and-receiving clerk," says Timothy C. Hubbard, director of quality system registration at Entela Professional Services Inc., a registrar based in Grand Rapids, MI.. In the past, an auditor came out and walked through the system to make certain the supplier met the requirements. Today, that's only part of the process. "We talk to management, design, production, manufacturing engineers, quality engineers and measuring and testing people. We observe processes and activities at all levels of the company," he says.
Is it worth it? Moving to one quality system from three or more means documenting every procedure. Then there are the follow-up audits every six months for the first three years. After that there are annual audits. "That's painless compared to what we go through now," says Bill Binroth, director of quality systems, Siemens Automotive. Plus, GM's Mr. Reid indicates that suppliers who meet the criteria for a long time, say eight to 10 years, may not be subject to intense audits as often.
Although they have to tighten their belts - each plant must be registered at a cost suppliers say runs between $20,000 and $50,000 per facility - most see it as a plus long-term. "It is not inexpensive," says Mr. Jacobs. "But there are a lot of suppliers that told us it is less expensive to go for third-party registration than to prepare for three separate annual audits from Big Three representatives." In some cases, suppliers also were second- or third-tier to others that also required audits.
"The cost of certification is sort of an initiation fee," says H. Lee Noble, President of Bayer Corp.'s Polymers Div. (formerly Miles). "We'll put a lot of emphasis on making sure we meet all the deadlines."
"We've been into continuous improvement for a long time, so we look at it as an investment," adds B. Hugh Mason, director, management development, JPS Auto-Products, an affiliate of Foamex-JPS Auto-Products. "It can't be anything but a plus for us."
Maybe, says O.P Gupta, vice president - North American Operations, Zexel Torson Inc. "but it's a Catch-22. We have to conform to one standard, but it slows progress in other areas. The bad news is that the current quality systems (ISO 9000, Q1, Mark of Excellence and Chysler Pentastar) are pretty good. We're going to spend three or four years rearranging a system that's already in place. The resources could be better spent solving real problems with improved design and manufacturing, not just working on the quality system."
Although he's for the new program, Louis F. Savelli, vice president of DuPont Automotive, says he thinks the implementation schedule is ambitious. That may be true. There are only about 12 certified registrars worldwide to service 13,000-14,000 tier-one suppliers, says Entela's Mr. Hubbard. That's up from nine in January, and more will be forthcoming, he says, but each of those registrars have a limited number of certified auditors.
Part of the problem has been procrastination. When QS-9000 came out six months ago, suppliers thought it was the "flavor of the month," Mr. Hubbard says, and didn't immediately jump on the bandwagon Now they find that the Big Three are serious and are reinforcing the deadline.
Never fear, says Chrysler's Mr. Jacobs. "This is not the kind of situation where if they miss deadline they drop dead ... we would expect suppliers to make a bonafide attempt and would expect them to meet that goal in relatively short period of time."
GM's trying to help. It has laid out rules that explain what it takes to become a QS-9000 registrar, and has given suppliers a list of organizations that certify registrars.
Right now, only first-tier production parts, service parts and materials suppliers must meet QS-9000. Whether second- and third-tier suppliers will have to be registered is up in the air. But most first-tier suppliers say they will ask their suppliers to meet the criteria, although few, so far, say they'll demand third-party registration.
Look for the big suppliers to take a careful approach, though. The cost of third-party registration could cripple small suppliers.
The next step is creating a standard for tooling and capital equipment suppliers. Called TE9000, it's for suppliers providing items such as injection molding, gauges or tooling to make a part. These may or may not require third-party registration, says Mr. Hubbard. The program should be introduced later this year.
Ralph Miller, president, APX International, an engineering service company, expects the standard to move into his bailiwick, so APX already is working toward ISO 9000 standards. "We believe that we will ultimately have to be QS-9000, but we're committed to doing it before it's required. ISO 9000 has standards for service companies. We're trying to anticipate what will be added by the Big Three. We can tweak much quicker than we can start from scratch."
Regardless of how far down the supplier food chain QS-9000 goes, education plays a mighty big role. The Automotive Industry Action Group (AIAG) is offering training. Developed by the Big Three, it is taught by General Physics Corp., a training company in Troy, MI. Those that complete the class are certified and can go back and train others at the supplier companies how to meet QS-9000 requirements.
UTA Automotive, for example, is training its people and expects to be certified by mid-1997. "We have to have more structure and discipline in our business systems," says Mike Ryan, vice president, quality and continuous improvement. "They're not telling us how to do things, but that we have to prove what we are saying is what we are doing.
"QS 9000 will not work if our 45,000 employees misinterpret what we are doing and it becomes a paper chase and we don't actually improve."
Here are some tips for achieving QS-9000 on time:
* Start early. If you haven't picked a registrar, find one.
* Be certain the registrar is accredited.
* Be sure the auditor is QS-9000 certified.
* Ask your registrar to do a pre-audit so there is early warning for potential problems.
* Make sure the supplier and registrar understand Appendix B, the code of practice for registrars detailed in the QS-9000 manual.
* Don't rush. It takes six months for a facility to win certification.
* If the registrar finds something out of compliance, make sure to fix the problem so it will benefit the company, not just meet the criteria. "Don't go overboard," says Mr. Hubbard. "Leave breathing room and think changes through thoroughly so they make sense in the long-term."