Fewer Auto Recalls in 2015: A Better Supply Chain

An industry laden with record recalls in 2014 needs to make one hell of a new year’s resolution for 2015.

2014_Auto_Recalls

By now, you’ve read far too many articles about the record recalls in the automotive industry this year. You know that the number totals over 56 million vehicles, with issues ranging from faulty ignition switches and alternators, to hood latches and airbags. You're probably aware that automakers have now recalled three times the number of new cars and trucks Americans bought this year. And I'm sure you've seen charts like the one below, comparing the number in increased automobile production since 2009 with the number of equipment recalls.

 

But this is all old news. Not only that, it’s news that doesn’t explain anything. What we care about is why the recalls happened, and how we can prevent 2015 from being another record-setting year.

 

Cause: Supply Chain

In a recent article, we highlighted the complexity involved in manufacturing a vehicle—and that complexity has only increased over time. In fact, 70% of the vehicles affected in the first quarter of 2014 were manufactured within the last five years, and feature systems and software with a strong tendency for glitches.  

But there’s a deeper relationship with supply chain. Just over a quarter of recalls over the past four years were caused by the top 10 assemblers, and the majority of them involved small companies and makers of add-on parts. Having to deal with extended supply chains and multiple partners has thus increased the chances of an incident. But this wasn’t always the case. In the late 90’s, automakers went from producing the majority of components that went into a vehicle, to spinning off their parts-making divisions, which ultimately created a communications gap in the manufacturing process. The result? A lack of visibility throughout multiple tiers of suppliers.


“With small manufacturers and suppliers contributing to the majority of [2014 first quarter] events, it’s clear that no organization is safe and that auto brands are only as strong as their weakest link.”

-Mike Rozembajgier, VP Stericycle


How to Reduce Recalls in 2015

In order to prevent the nightmare of 2014 from spilling into the upcoming year, it’s increasingly important for manufacturers to keep tabs on independent vendors—as they may be tempted to slack off on vetting and re-certifying suppliers on a regular basis. This calls for more transparency across the extended supply chain. As Keri Dawson, VP of Industry Solutions at MetricStream puts it:

 

“It’s critical to know every step along that product’s lifecycle, so you can make a determination of where the failure occurred.”

 

Below are three steps to ensure a safer, more robust automotive supply chain.

  1. Work with suppliers. The relationship between OEM manufacturers and suppliers have gone from one manufacturer juggling multiple suppliers, to a single supplier supporting multiple manufacturers. This creates issues where a single supplier affects multiple manufacturers and multiple part lines. By working closely with suppliers, manufacturers are able to understand the supplier’s internal processes and offer ways to improve the quality of the component parts—so they meet the manufacturer's quality standards.

  2. Leverage intelligence. Data that’s gathered in-process offers a second tier of intelligence that can be used to increase the efficiency and quality across the enterprise and supply chain. By utilizing advanced data analysis software, it’s possible to compare site to site or supplier to supplier, shedding light on areas that can be improved. For example, if two facilities are running identical processes, but one is more efficient than the other, the information can be shared to enable process improvement.

  3. Get visibility. It’s no longer enough to rely on a paper report and the word of your suppliers that the parts received meet OEM standards. It’s an absolute necessity that manufacturers have visibility into supplier operations to understand what’s going on within the manufacturing process, so that the appropriate testing is conducted and monitored. Specifically, real-time visibility allows a complete view of supplier operations, preventing the re-inspection of incoming parts.



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