When potential buyers look for a car, their top consideration is quality. These buyers turn to product comparisons on Consumer Reports or J.D. Power to inform them of reliability, safety, repair costs, warranty coverage and recalls for vehicle brands and models.
The automaker that wants to succeed must drive its quality scores higher than the others.
The automaker that wants to succeed must drive its quality scores higher than the others. This has long been a challenge for Audi and the Volkswagen Group, but the tides have changed.
In 2015, Audi and Volkswagen launched the Software Quality Improvement Leader (SQIL) program. With this program, a troubled supplier uses an objective measure from the Automotive SPICE® to hire an independent company to oversee ongoing improvements until it reaches an independent goal. Suppliers base improvements upon best practices known to boost quality while also lowering costs.
Volkswagen and Audio are seeing early returns on this effort. The automaker lowered recalls in 2019 and 2020. In July 2020, MotorBiscuit stated that “Audi vehicles are [now] known for being very dependable and safe.” And in 2019, J.D. Power remarked Audi had made “notable strides in reliability.”
This marks a significant improvement from 2014 to 2018 when the Volkswagen Group bore the distinction of having the fifth most recalls of any manufacturer. During that same period, the J.D. Power Initial Quality Study listed Volkswagen and Audi in the bottom 10 brands. And, in 2016, Popular Mechanics ranked Audi as the 5th most expensive vehicle brand because of high repair costs and repair frequencies.
The transformational SQIL strategy is a departure from the strategies of other automakers that find new sources of supply, levy punitive fines, and boost surveillance when suppliers don’t deliver.
These automakers often eliminate dysfunctional suppliers completely, leaving them with a singular vendor to supply a specific part or raw material. But a singular source enhances a company’s risk in a disruptive market and can lead to higher long-term pricing.
Switching to new suppliers can carry a hefty price tag. Supplier conversions require investments in costly and complex electronic platforms with over a billion lines of code.
Punitive fines punish suppliers for low quality, late shipments, etc., but rarely lead to lasting change. Reward systems drive better results. Tom Knoll, Deere & Co.’s Vice President of Worldwide Management and Logistics, told IndustryWeek that programs, like the company’s Achieving Excellence effort, boost reliability. The company’s reward system categorizes vendors as “approved supplier, key supplier, or partner” and rewards high performers with more business, Knoll reported.
Surveillance measures dispatch internal agents to supplier facilities to audit their processes and review recommended action items. The negative result of these measures are clandestine operations where suppliers work hard to hide risky behaviors and shift more resources to the competition.
The SQIL program maintains partnerships in a very disrupted industry and directs money toward better efficiency and improved products.
Originally posted on Auto Dealer Today