DATE : 02-09-03 19:22
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DaimlerChrysler Sets July 2004 Tier 1 Deadline
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The deadline for transitioning to ISO Technical Specification (TS) 16949:2002 has been moved up by 18 months for approximately 3,000 of the 23,000 automotive suppliers currently registered to QS-9000:1998. Four months after ISO/TS 16949:2002 was published and just before the release of a joint letter from the Big Three officially stating that the TS will replace QS-9000 on December 14, 2006, DaimlerChrysler issued a letter requiring its suppliers worldwide to transition to ISO/TS 16949:2002 by July 1, 2004.
The third largest original equipment manufacturer (OEM) in the United States and worldwide has set an earlier transition date than other OEMs subscribing to QS-9000 or VDA 6.1, the German automotive quality system requirements catalog, and this move will have a significant impact on the North American and international automotive supply chains. "The mandate affects all production and service parts suppliers to DaimlerChrysler, which includes its Mercedes, Chrysler Group, and Commercial Vehicles units," explained Hank Gryn of the Auburn Hills, MI-based Chrysler Group.
Gryn is a member of both the DaimlerChrysler, Ford Motor Company, General Motors Corporation Supplier Quality Requirements Task Force (SQRTF) and the International Automotive Task Force (IATF), which are responsible for QS-9000 and ISO/TS 16949:2002, Quality management systems—Particular requirements for the application of ISO 9001:2000 for automotive production and relevant service part organizations, respectively.
At present, suppliers to DaimlerChrysler's Mercedes operations based in Stuttgart, Germany, must be registered to VDA 6.1 or ISO/TS 16949, while suppliers to its Chrysler Group operations based in Auburn Hills, MI, must be registered to QS-9000:1998 or ISO/TS 16949. The Commercial Vehicles units vary as to which registration scheme each requires. However, Gryn told THE INFORMED OUTLOOK that the DaimlerChrysler decision to set an earlier deadline than other OEMs subscribing to QS-9000 or VDA 6.1 was not driven by a need to transition suppliers to the TS by July 2004.
"VDA 6.1 doesn't really have an expiration date," commented Gryn. "The real reason transitioning all of DaimlerChrysler's suppliers to ISO/TS 16949:2002 registration sooner works out for us is that we will then have all our suppliers using one system worldwide. We are one company, and having our entire supply chain adhering to one set of quality management system requirements will benefit our company. "It's more than just the value of the TS, it is also the value of the associated registration scheme. With the introduction of ISO/TS 16949:2002, the automotive OEMs have also introduced tighter controls on the registration process itself. Now, accredited registrars that have been qualified to conduct registration assessments to the TS will be evaluated and closely monitored by the ISO/TS 16949 oversight organizations, such as the International Automotive Oversight Bureau [IAOB], which will improve the registration process."
Gryn also remarked that DaimlerChrysler anticipated improvements in the auditing and management of supplier quality management systems (QMSs) with ISO/TS 16949:2002. "The auditor training and examinations involved with being qualified by the IAOB and other oversight organizations will ensure better capability of registrar auditors. Plus, ISO/TS 16949:2002 itself has a natural flow that is more in line with the way an automotive business is run, thanks in part to the ISO 9001:2000 process approach structure. The process approach is the only way to audit an organization and its management system. What's more, senior management now has to be involved and they have to be audited. You can't miss them in an audit for ISO/TS 16949:2002."
The letter was issued in late July 2002 and was signed by Auburn Hills, MI-based Gary C. Valade, who is Executive Vice President of Global Procurement and Supply for DaimlerChrysler, AG. The mandate means that Chrysler Group suppliers have slightly less than 2 years to make the transition to ISO/TS 16949:2002. A copy of the letter is reprinted in THE INFORMED OUTLOOK Newsletter, August 2002. Gryn estimated that approximately 3,000 suppliers to the Chrysler Group are registered to QS-9000 and will need to make the transition.
Gryn noted that DaimlerChrysler is tracking on a scheduled basis how many of its suppliers are registered to the TS, which involves identifying its suppliers in the ISO/TS 16949 registration database maintained by the IAOB.
"The minute the announcement [of the transition deadline] came up, I started receiving certificates to ISO/TS 16949. So, we know that some were prepared well in advance."
What Are the Other Big Three OEMs Doing?
As noted, the DaimlerChrysler announcement issued July 29, 2002, preceded a letter from the SQRTF issued in early August 2002 that states officially that ISO/TS 16949:2002 will replace QS-9000:1998 when it expires on Dec. 14, 2006. The letter strongly urges suppliers registered to QS-9000 to upgrade their "registered site(s)…to ISO/TS 16949:2002 at the expiration of their current QS-9000 certification, and no later than Dec. 14, 2006, or earlier based on individual OEM requirements." The full text of the letter is reprinted in THE INFORMED OUTLOOK Newsletter, August 2002.
The letter is important because it verifies for the first time in writing that the Big Three intend to replace QS-9000 with ISO/TS 16949 and sets a definite end point for transitioning to an ISO 9001:2000-based specification. However, it also raised the possibility that Ford and GM would set earlier deadlines than December 2006.
In fact, some registrars and suppliers were not surprised by the mandate, only by the fact that it was limited to DaimlerChrysler. "The announcement was expected by our organization and some of our automotive clients, but it was expected to be a joint announcement from the Big Three," commented Bill Sullivan, Marketing Manager of DNV Certification. "The fact that there was not a joint announcement would tend to indicate that there was not consensus among the Big Three on implementation timelines."
In attempting to verify the intentions of the other Big Three members, THE INFORMED OUTLOOK learned from Russ Hopkins, who represents Ford on the SQRTF and IATF, that Ford plans to let its production and service part suppliers transition their QS-9000 registrations to ISO/TS 16949 between now and Dec. 14, 2006. "Ford has published the joint letter stating that transitioning to ISO/TS 16949:2002 is strongly recommended at the expiration of the supplier's current registration," affirmed Hopkins. "Otherwise, the requirement is ISO/TS 16949 registration by Dec. 14, 2006."
Hopkins acknowledged that the reason the joint letter is recommending that suppliers make the transition to ISO/TS 16949:2002 at their next QS-9000 certificate renewals is because it might save the suppliers money, since they will require a more extensive registrar assessment at the certificate renewal anyway, and it will stagger the rollout of ISO/TS 16949:2002 among Tier 1 automotive suppliers.
Ford is not yet tracking on a scheduled basis how many of its suppliers have made the transition and has no targeted plan for when certain numbers of suppliers should be transitioned. "But we do strongly advise against waiting until the last minute," stressed Hopkins.
GM had not responded by press time to an inquiry regarding whether it is considering an earlier deadline, although it is expected to also give suppliers until December 2006 since it has the largest number of suppliers needing to make the transition.
Joseph Bransky, who represents GM on the SQRTF and IATF, has previously pointed out that the SQRTF made arrangements that would permit continued use of the verbatim text of ISO 9001:1994 within QS-9000:1998. The reason was to extend the registration life of QS-9000 until 2006 in order to avoid a bottleneck of QS-9000-registered organizations rushing to transition after release of ISO/TS 16949:2002 in March 2002.
Hopkins also told THE INFORMED OUTLOOK that Ford's customer-specific requirements for ISO/TS 16949:2002 "were out for internal review in late July, with an August 2002 publication target." It is expected that Ford will require use of the five reference manuals that are noted or specified in QS-9000. Hopkins offered the following advice to all suppliers: "Do not wait until the last minute, but prepare well. This is not an element-by-element compliance effort any more."
What Does the Mandate Mean to Suppliers?
The announcement by DaimlerChrysler of a deadline has probably raised three key questions at many suppliers to the Chrysler Group and beyond:
How much time and effort will the transition take our organization?
Are the customer-specific requirements different from those in QS-9000?
What must we ensure our suppliers do so that we are in conformance with the TS?
As for Question 1, the expectation is that any supplier registered to QS-9000:1998 and meeting the customer-specific requirements of their OEM customers will not require a great deal of time or effort to make the transition. "It really takes about six months to transition," replied Gryn, who nevertheless advised production and service part supplier to get their QMSs up and running as soon as possible. "They can make the actual registration transition at their next surveillance audit. That would be the way to do it."
In fact, Gryn viewed a QMS conforming to ISO/TS 16949:2002 as a change that will make managing the system easier for most organizations. "The change is not that great, with adjusting the system to follow the process approach being the big difference. In truth, the new system should be much simpler for an automotive supplier because its managers and personnel already know their own business. They should write down what they do and do what they write down and then follow their plan.
"With ISO/TS 16949:2002, the auditors will be checking more for how well the company is complying to OEM company-specific requirements and how it manufactures its product. That's because the QMS now starts from marketing and ends with after-sales contacts with the customer."
This is not just the viewpoint of the customer. "Those organizations that are registered to QS-9000 and ISO 9001/2:1994 are substantially compliant with the requirements of ISO/TS 16949:2002," confirmed Sullivan, based on DNV's assessments so far of clients transitioning from QS-9000. "Those that have been registered to ISO 9001:2000 are almost there."
As for Question 2, the Chrysler Group has completed its customer-specific requirements for ISO/TS 16949:2002 and posted them on several Web sites. According to Gryn, the customer-specific requirements were posted in early August 2002 on the EEN, which is the Web site the Chrysler Group maintains for its suppliers. In addition, the requirements have been provided to AIAG, which was expected to post them on its Web site (www.aiag.org) by mid-August 2002. They will also be available on the IAOB Web site (www.iaob.org), where the DaimlerChrysler company-specific requirements for ISO/TS 16949:1999 were still accessible at press time but not those for the 2002 edition.
"Among the big changes from QS-9000, our company-specific requirements now specifically refer to the five reference manuals mentioned directly in QS-9000 but not in the TS," said Gryn. "They are reference manuals and they don't change, so this actually does not involve a change from what a QS-9000-registered supplier would need to do. In addition, a few things have been adjusted since the third edition of QS-9000 because of the changes within the corporation—for instance, different phone numbers." In effect, the company-specific requirements represent updating of information since QS-9000 was last revised in 1998 but not new requirements.
However, each unit of DaimlerChrysler will be maintaining separate company-specific requirements that reflect the previous requirements of each unit and the requirements in QS-9000 or VDA 6.1. "Each division has its own way of doing things, so check the individual Web sites of your customers, even if they are all DaimlerChrysler."
As far as Question 3 is concerned, ISO/TS 16949:2002 registration by a Tier 1 supplier means that its suppliers will need to be registered to ISO 9001:2000, Quality management systems—Requirements, after Dec. 15, 2003, in order for the Tier 1 to obtain/maintain registration to ISO/TS 16949:2002. This is a requirement in 7.4.1.2, Supplier Quality Management System Development, which states: Unless otherwise specified by the customer, suppliers to the organization shall be third party registered to ISO 9001:2000 by an accredited third-party certification body.
"For a supplier to get registered to ISO/TS 16949:2002 by 2004, it will need to make sure all its suppliers are registered to ISO 9001:2000 and are pursuing TS compliance," emphasized Gryn. "If any of its critical-to-quality suppliers fails to obtain ISO 9001:2000 registration, the registrar cannot issue an ISO/TS 16949:2002 certificate or must withdraw an existing certificate. However, we are reasonable. We are not trying to make this financially cumbersome for the supply chain. So, if our supplier has a mom-and-pop shop as its supplier and it is impractical to make the shop get registered, we will make alternate arrangements."
Gryn indicated that there are no plans to establish procedures that would enable Tier 1 suppliers to waive the requirement for supplier registration to ISO 9001:2000 in favor of an approved second-party auditing approach for subcontractors. "We have not specified anything different in terms of second-party audits by our suppliers of their suppliers. ISO 9001:2000 registration and pursuit of TS conformance among our suppliers' suppliers remains the acceptable approach to demonstrate supplier development and supplier conformance."
"For Tier 1 suppliers to DaimlerChrysler, it is a clear mandate," admitted Sullivan, who added, "For other QS-9000 suppliers and subcontractors, it may accelerate their transition to ISO 9001:2000 as an interim step to compliance with ISO/TS 16949:2002." Sullivan also indicated that he expected the TS-qualified registrars to have adequate time to plan and have the audit resources available to meet demand for ISO/TS 16949:2002 transitioning. "And, even though this is a 'system' registration, the ultimate benefit should be a better quality product."
Gryn concluded by offering the following warning: "I would like to tell the supply chain that, if the third-party registration system does not function effectively, it will go away and we will go to something else. Something else is what certain other OEMs are doing now—a lot of second-party audits. It will be customer audits and will involve separate audits from each customer. It would be unfortunate for the third-party system to fail and for us to move in the opposite direction."
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