During the 2022 AIAG Quality Summit held in Novi, MI last October, where a plethora of topics concerning the future of quality in the automotive industry were discussed, concerns surrounding the drastically changing supply chain to support the OEM move to EV production appeared to be a common thread among questions posed during the OEM and IATF sessions Q&A.
Quality Challenges Faced by New EV Entrants and OEMs in the Automotive Supply Chain
The drive by OEMs to convert internal combustion engines to EVs continues to accelerate, causing the need for a variety of new materials and components never before used in the industry and creating a new and very different supply chain – with those new suppliers come new challenges. Today, no one seems to dispute the need for the conversion or question the pace in which it must happen; transportation made up 27% of US greenhouse gas emissions in 2020, according to the US EPA, and globally 37%, according to the International Energy Agency – but it is now up to OEMs and their new suppliers to meet the challenges to ensure that a consistent supply of high-quality components are available to meet production demand.
Below are some of the notable questions posed to and answers given by the panel of OEMs at the event regarding the challenges faced by OEMs as they bring on new suppliers for EV components and considerations for prospective EV suppliers:
Q: What do you see as the biggest challenge bringing on new suppliers to the EV market who may or may not have automotive experience?
A: The automotive industry is one of, if not the, most complex high volume, highly regulated industries in the world. As has been demonstrated by new entries into the EV or AV market, the manufacturing of highly complex products at high volume which need to protect people over a long period of time in very dangerous situations under usage profiles sometimes beyond design intent with a high level of craftsmanship, quality and visual and tactile appeal has challenged even the most successful of new entrants into this market. In summary, some of the key areas which will continue to challenge all manufacturers and designers in the automotive industry are (not in any particular order): safety, reliability, functionality, understanding customer needs, durability, craftsmanship, quality, design appeal, interactivity with customer needs, customer usage profiles, etc.
Q: Is the desire of the OEMs to have all levels of the supply chain certified to IATF 16949? If so, what is the timeframe?
A: Supply chain quality management system development has always been a significant challenge, demonstrated by the data which shows that a significant portion of the reliability and quality issues experienced by the consumers originate in the supply chain at lower tier suppliers. Quality system development strategy always needs to be based on the risk to the customer (all the way up the chain to the consumer). As demonstrated in the recently available value add brochure for IATF 16949 certification, the IATF certification scheme (standard, rules, CBs, auditors, Oversight, etc.) offers many advantages over certification to ISO 9001 or to no certification at all. Certain companies, commodities and company cultures benefit more from the IATF certification scheme advantages. Those companies should be targeted first for adopting, incorporating and certifying to the IATF requirements for the greatest benefit to the automotive industry. Other companies managing themselves better and causing fewer issues could be a lower priority for certification, but all eligible companies will likely see benefit to certification. This is why there is no fixed timing for full industry adoption of IATF 16949 certification, but a steady migration should be made to address the most significant opportunities first.
The OEM panel clearly illustrates a preference for all manufacturers in the supply chain to have a QMS that is certified against IATF 16949, requiring that suppliers throughout the supply chain who are not certified to IATF 16949 have a quality management system that at least meets the requirements of and/or is certified against ISO 9001 and that there is a plan to achieve certification against the automotive standard – and while they were hesitant to put a timetable to it, the insistence that there is a steady migration for all suppliers in the supply chain to the IATF standard is something that prospective EV suppliers throughout the supply chain – from firms providing the nickel, lithium, copper, and cobalt used to make batteries to the finished Li-ion batteries themselves – should take note of.
Aside from the quality requirements that will pose a challenge to both OEMs and prospective EV suppliers, many of these elements are sourced from areas where labor practices, sustainability requirements, and other ESG commitments may not be of the standard the OEM requires. For example, the raw materials required to manufacture EV parts and components carry reputational risks for unethical mining. Suppliers producing batteries must meet strict standards, such as those found in the Supply Chain Sustainability Guidance document recently revised by AIAG, and have a transparent sub-supply chain. OEMs will obviously take measures to protect their reputation and ensure their supply chain is sustainable, and they also need to ensure labor practices are fair and safe and volatile supply chains are controlled to consistently meet consumer demand – OEMs can mitigate risks in the new EV supply chain through second and third-party supplier audits which would consider how the new EV suppliers are managing items such as:
- Defect prevention
- Counterfeit parts
- Product safety
- Data management
- Handling of obsolete parts
- Documentation
- Ethical behaviors
- Ethical sourcing
- Contingency planning
- Change and warranty management
- Management of sub-suppliers, etc.
How IntellaQuest Supports the EV Supply Chain
The manufacturing and delivery of electronic components into the automotive supply chain require a commitment to quality and value at the highest levels and certification to IATF 16949 is the best way to give automotive OEMs assurance that the companies within their supply chain have a QMS in place that conforms to the quality and reliability the OEMs expect – when EVs seek certification against IATF 16949, it shows the dedication to delivering components and modules that are innovative, premium quality, and competitive, but were also produced in a manner that upheld environmental and social responsibilities that the industry leaders expect.
IntellaQuest’s automotive suite of applications are designed from the ground up to help suppliers of any size meet these automotive expectations and to easily maintain conformance to IATF 16949 requirements. Our core QMS solutions make document and record control a breeze, our advanced automotive documentation options such as FMEAQuest and PPAPQuest will guide you in producing better FMEAs and to harness better and more transparent control throughout your supply chain and with their part approval process, and our EHSQuest application will allow for you to instill confidence from your OEM customers in your ability to meet your ESG commitments.
