Current State of Quality in the

Automotive Industry

Scott Gray
Director, Quality Products and Services, AIAG
Agenda

Survey Demographics
Top Issues
Deep Dive on Top Five
Why is this issue important?
Level of difficulty to close the gap?
Level of impact if the gap is closed?
Key Takeaways

2
 Survey Demographics

85% of respondents Good balance across

are from Suppliers product commodities

Source: Deloitte AIAG Quality 2020 Study 3

 Survey Demographics

Feedback from functional

SMEs, Middle Management Approximately one-third from
and Corporate Executives Engineering, Operations, Sales
and Purchasing functions

Source: Deloitte AIAG Quality 2020 Study

4
 Current State - Top Issues

All
Issues Respondents OEM Supplier
Problem Solving 1 1 1
Customer Specific Requirements 2 2 2
Quality Management Systems 3 7 3
Product Development 4 5 4
Loss of Experience 5 4 5
Supplier Management 6 3 6
Change Management 7 5 7
Core Tools 8 8 8
Warranty 9 9 9
Metrics 10 10 10

Source: Deloitte AIAG Quality 2020 Study 5

 Issue #1 - Problem Solving

Why is Problem Solving important to you?

1. Impacts ability to manage, monitor, and

respond to quality related events
2. Impact ability to implement operational
efficiencies
3. Impacts brand and/or customer relationships

OEM and supplier rankings of the top three reasons why

Problem Solving is important were exactly the same.

Source: Deloitte AIAG Quality 2020 Study 6

 Problem Solving

How capable is your company now? What is the risk to the industry if we
dont improve?

Almost two-thirds of respondents

feel their organizations are at More than half of
best Moderately capable at respondents see significant
Problem Solving risk if no action is taken to
close the gap.

Source: Deloitte AIAG Quality 2020 Study 7

 Problem Solving
How difficult will it be to close the gap? How much impact if we close the gap?

OEMs and suppliers almost unanimously agree that

closing the gap is not easy, but doing so would have a
significant level of impact on improving quality.

Source: Deloitte AIAG Quality 2020 Study 8

 Problem Solving - Causes
CAUSE OEM SUPPLIER
Jumping to the Solution 1 4
Root Cause Analysis Lacking 2 1
Management / Organizational Culture 3 2
Rushed 4 3
Lack Prevention through Lessons Learned 5 5
Not Data-driven 6 7
Not Systemic 7 8
Lack Resources 8 6

Although differences emerge when ranking why

Problem Solving is inadequate, both point to a desire
for a rapid answer, compromising analysis.
Source: Deloitte AIAG Quality 2020 Study 9
 Issue #2 CSRs

Why is this issue important?

Reasons OEM Supplier
Impacts ability to standardize business
5 1
processes and systems
Impacts ability to manage customer
1 2
expectations and relationships
Impacts ability to implement operational
3 3
efficiencies
Impacts ability to manage profitability 4 4
Impacts ability to manage, monitor, and
2 5
respond to quality-related events

OEM and supplier rankings differed on the top reasons why CSRs
are important to improving quality

Source: Deloitte AIAG Quality 2020 Study 10

 CSRs

Impact from OEM CSR reduction Impact from T1 CSR reduction

OEMs and suppliers overwhelmingly agree that the industry would

benefit from a significant reduction in Customer Specific Requirements

Source: Deloitte AIAG Quality 2020 Study 11

 CSRs

Respondents also overwhelmingly agree that the degree of

difficulty to minimize CSRs would be significant

Source: Deloitte AIAG Quality 2020 Study

12
 Issue #3 - QMS

Why is this issue important to your company?

Reasons OEM Supplier
Impacts ability to standardize business
1 1
processes and systems
Impacts ability to implement operational
5 2
efficiencies
Impacts ability to manage customer
3 3
expectations and relationships
Impacts ability to mange, monitor, and respond
2 4
to quality related events
Impacts ability to manage profitability 4 5

Respondents agree that standardization is the #1 area impacted

by complex and redundant QMS requirements.
Source: Deloitte AIAG Quality 2020 Study 13
 QMS Average Site Impact

If complexity and redundancy

How many workdays does it take annually
were reduced to a minimum, how
to comply with all QMS requirements?
many workdays would remain?
Avg. = 116 workdays Avg. = 67 workdays

Opportunity = 2.7M Workdays

Source: Deloitte AIAG Quality 2020 Study

14
 QMS Average Site Impact

What are your approximate total If complexity and redundancy were

expenses related to all the external reduced to a minimum, what
audits certification and customer? approximate expense would remain?

Avg. = $100,225 Avg. = $51,189

Opportunity = $3.5B

Source: Deloitte AIAG Quality 2020 Study

15
 QMS
Top Actions that have the most potential for improving the effectiveness
and efficiency of current QMS requirements
1. Reducing TS requirements to only those elements with direct impact on
product quality and reliability
2. Determining audit schedules based on performance
3. Combining TS and VDA requirements

Top Issues or Concerns if no change is made

1. The need to maintain multiple systems in support of multiple standards
2. Increase in number of CSRs (OEM and Tier 1)
3. Poor correlation between certification(s) and actual performance

Respondents agree on the top actions to improve QMS, and are

aligned on the potential implications if no changes are made

Source: Deloitte AIAG Quality 2020 Study

16
 QMS

Impact that could result from

The level of resistance you
improved standardization and
believe would be encountered
reduced complexity of standards
in changing current QMS
and requirements
standards and requirements

Source: Deloitte AIAG Quality 2020 Study

17
 Issue #4 Product Development

Top Reasons Why Product Development is Important

Reason Total Supplier OEM
Impacts ability to assure product
1 1 1
compliance
Impacts ability to manage profitability 2 2 6
Impacts ability to implement operational
3 3 3
efficiencies
Impacts ability to drive innovation and
4 4 2
collaboration
Impacts customer relationships 5 5 7

Respondents agree that assuring product compliance

is the top reason why this issue is important

Source: Deloitte AIAG Quality 2020 Study 18

 Product Development

Current level of
capabilities to design,
develop, validate, and
launch new products
effectively.

Respondents feel their organizations are

capable in product development

Source: Deloitte AIAG Quality 2020 Study 19

 Product Development

Improvement Actions OEM Supplier

Top two Design in Quality 1 2
improvement Design for Manufacturability 2 1
actions that
Lean Product Development 5 3
should be
pursued System DFMEA 3 4
Design for Six Sigma 4 5

Sources of Complexity OEM Supplier

Top sources of Unrealistic Specifications 1 1
complexity and
System validation occurs at launch 2 2
risk if no
actions are Continuous launch cycles 4 3
taken Global Platforms 3 4
Advanced technology software 5 5

Source: Deloitte AIAG Quality 2020 Study 20

 Issue #5 Loss of Experience

Top reasons this issue important to your company

Reasons OEM Supplier Total
Impacts ability to avoid repeating past
5 1 1
mistakes
Impacts ability to implement operational
1 2 2
efficiencies
Impacts ability to develop new talent 2 3 3
Impacts ability to solve problems 2 4 4
Impacts ability to manage, monitor, and
2 5 5
respond to quality-related events

Respondents believe this issue will impact their

ability to avoid repeating past mistakes and ability to
implement operational efficiencies

Source: Deloitte AIAG Quality 2020 Study 21

 Loss of Experience

Over three-quarters of respondents What methods do you use to

rate their organizations, at best, as preserve and transfer knowhow?
moderately capable of preserving
and transferring knowledge

Source: Deloitte AIAG Quality 2020 Study 22

 Loss of Experience
Risk to the industry if no action is
Level of difficulty to address the
taken
concerns

Respondents overwhelmingly feel that while it is

difficult to address the issue, not addressing the loss
of experience is a significant risk to the industry.
Source: Deloitte AIAG Quality 2020 Study 23
Key Take Aways
Tough Challenges, Big Rewards
Significant levels of difficulty will be encountered in driving
change, yet all agree significant benefits will result
Solve the Problem Solving Challenge
The issue isnt lack of tools, or skills to use them, the issue is
leadership, cross-functional team culture, and discipline
Standardization. Standardization. Standardization
Complexity and redundancy drive process/system variation
Huge amounts of time and money could be saved
Product Development is key to quality, product compliance
More emphasis on designing in quality, design for
manufacturability needed to address advanced technology and
system validation challenges

Source: Deloitte AIAG Quality 2020 Study 24

Quality Survey Partner

AIAG wants to thank our partner

For their support in getting the survey

developed and launched to the industry
We also appreciate their insights on the
analysis and reporting of the results

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Closing

Questions?

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