Automotive warranty management – basic terms

Current IATF requirements focus not only on monitoring quality complaints from customer plants, but also on automotive warranty management. The two main points that realize these are following: 10.2.5 – Warranty management systems and 10.2.6 – Customer complaints and field failure test analysis.

It should be remembered that above is also an input data for management review in accordance with point (subpart h).

In this case, few basic terms should be identified:

IPTV (en. Incidents Per Thousand Vehicles)

Also known as the C1000. This indicator determines the number of problems reported by final customers visiting the dealer stations. This does not automatically mean the replacement of components. In this case dealer can for example, only update the software, lubricate interface elements, or perform their additional tightening.

The starting point for defining the above-mentioned indicator is a joint work which is carried out by the customer’s engineering and the organization of the reliability plan, which corresponds to the implementation of APQP point 1.4. Product and process assumptions.

From the IATF’s point of view, the reliability plan is included in the requirement defining output from design and development. An example of a graph showing the relationship of IPTV to MIS is presented below.

IPTV vs. MIS graph

Picture 1. IPTV to MIS relationship

TF (Technical Factor – %)

Defines the percentage share of the organization’s financial responsibility for the parts replaced by the dealer that are covered by the warranty period. From the supplier’s point of view, this is a key indicator that directly translates into poor quality costs.

Defining its value should start immediately after SOP (start of production) with the analysis of the first parts. Usually the first meetings with clients regarding defining of Technical Factor take place a few months after the project is launched. In this case is already analyzed several dozen parts (of course, it can be more which is more advantageous for the organization).

To the final evaluation is taken into account:
– the number of parts analyzed in a given period
– number of parts for which a defect can be assigned for supplier responsibility
– the number of parts for which no defect from final customer has been confirmed (NTF – explained below).

It is also worth remembering that TF is not an indicator that is defined once. Depending on the achieved quality performance, this value may be reduced (in case of actions implemented by the organization for identified defects) or increased. Second case will be related to chronic problem assigned to the process, subcomponents or design. Such issue should be analysed in automotive warranty management activity by organization with big attention.

NTF (No trouble found)

No confirmation of the defect. The term used when analyzing warranty returns, for which, after performing standard tests, no defects indicated by the end user were found. Depending on the customer (OEM) additional requirements related to NTF may be applied. For the VW group, additional requirements are defined in the “VDA – Field Failure Analysis” manual.

On the other hand, in case of the Stellantis-FCA group, if the warranty is managed as part of the Tutorship, NTF is determined during the tests carried out before sending back the parts to the supplier. For this client the reference document which should be used in such activity is: CQI-14 Automotive Warranty Management.

Months in Service (MIS)

Defined as the time period during which the vehicle is used by the end customer. The usual assumption is that 30 days of use is equivalent to the index unit (30 days = 1.0 MIS). When working with a Ford customer, it is worth remembering that it is referred to as TIS: Time-In-Service.

The most popular time periods are: 3 months (3 MIS) when the incident occurred, counting from the date of vehicle purchase by the end customer until issue reporting to the dealer, 12 (12 MIS) and 24 (24 MIS) months. Nevertheless, customers such as VW, GM and Ford give the opportunity to see the performance even for one month.

In summary, each person in the organization who is responsible for managing warranty returns should familiarize themselves with the above terms in order to correctly understand the links between them and identify their impact on the potential financial invoices.

Tier 2 component producers play in the automotive supply chain. Their manufactured components are integrated into vehicles, impacting their overall quality, reliability, and performance. Ensuring effective warranty management becomes imperative to maintain customer satisfaction and meet the high-quality standards expected by Tier 1 suppliers and automakers.

Why automotive warranty management is so crucial for components producers (Tier 2)

First and foremost, automotive warranty management is vital for Tier 2 component producers to uphold customer satisfaction. By offering comprehensive warranty coverage and responsive customer support, producers can establish trust and loyalty among end customers. This, in turn, strengthens their reputation in the market, leading to increased sales and long-term customer relationships.

Effective warranty management also enables Tier 2 component producers to control costs and reduce financial risks. By implementing robust quality control measures and closely monitoring warranty data, producers can proactively identify and address potential issues, minimizing warranty claims and associated expenses. This not only saves costs but also enhances profitability and competitiveness in the industry.

It also serves as a risk mitigation strategy for Tier 2 component producers. By closely tracking warranty claims and analyzing trends, they can identify recurring issues and take corrective actions to prevent future failures. This proactive approach helps minimize potential recalls, legal liabilities, and reputational damage, safeguarding the long-term viability of their business.

Moreover, effective management is crucial for maintaining strong business relationships with Tier 1 suppliers and automakers. These partners often have stringent requirements regarding warranty coverage and claim handling. By efficiently managing warranties and meeting these requirements, Tier 2 component producers can solidify their position as reliable and trustworthy partners, ensuring continued collaboration and business opportunities.

For this reason companies should be familiarize with basic terms applied in this area.

More information on the management of warranty returns, together with examples of documents, is provided during dedicated training courses on which we cordially invite all of You.

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