MACS Monthly Newsletter - 2020 - APR7

The reality of the global supply chain is that quality control
systems such as QS9000, ISO standards, TQM, etc. are only as
good as the organizations who claim to use them.

Obviously, there would be differences between the quality expectations for the automaker's vehicle assembly plant and your
repair bay. The automaker can't make profits if they're plagued
by assembly line delays or warranty costs from faulty parts. The
independent repair shop must balance quality with affordability demands from their cash paying customers.

Tim Nybo was an American entrepreneur with little money
and big dreams. He moved to China to start a company that
would supply cases for Apple iPads. According to Nybo's article in Forbes magazine, after his first attempt to build his product he found every single iPad case his new company shipped
out turned out to be defective - all 6,000 of them! What Tim
Nybo learned was that high quality can be obtained from nearly
any manufacturing facility located in any country if the following bits of wisdom are made centerpiece:

Most on the panel agreed that the definition of OEM is that
the supplier of a particular part won the automaker's business
for that part for a finite build period. It can be more complicated,
however. For example, you can have two OEM suppliers simultaneously building the same evaporator for the same make,
model and year. This can occur when each of those suppliers'
manufacturing capabilities lack the volume the automaker requires or when the automaker simply wants to divide their business between a pair of suppliers.

1.
Distributors, not manufacturers, are responsible for
quality. The distributor's name on the product is often the only
name the end user will see. If the distributor wants it manufactured cheaply (with quality thrown by the wayside) then that's
what a manufacturer will give them. If they want quality at a
reasonable price, then they'll get that.
2.
Using middlemen is not the best approach. In this
case middlemen are companies that set up manufacturing in a
low-cost labor market country for a distributor in another country. This often doesn't work because the actual company that
wants the high quality doesn't have a direct hands on working
relationship with the company who's manufacturing the part.

OEM-level works like this. A parts supplier didn't win the bid
from an automaker due to production volume limitations, pricing, etc. The part's quality may have the same high quality that
the Tier 1 OEM supplier's part has, but that supplier didn't get
the automaker's business, so it can't make the OEM claim. It can
truly claim "OEM-level" though.
Sometimes a Tier 1 OEM's competitor gets an automaker's
business after the vehicle leaves the production phase. That part
is referred to as OES (original equipment service). The reasons
can range from higher quality to better pricing. Regardless of the
exact reason you can rest assured that if the part was given the
honor to be placed on that automaker's dealership parts shelf,
it must be the same (or higher) quality than the first OEM supplier's part had.

How do you ensure good quality in the auto parts
you purchase?

I was asked to speak at an industry forum at AAPEX (Automotive Aftermarket Parts Expo) in Las Vegas a few years ago.
The title of the interactive forum was "What's in the Box". It was
sponsored by AASA (Automotive Aftermarket Suppliers Association) which is a trade organization my company belongs to.
I was on the panel along with several friends who worked for
other Tier 1 OEM suppliers. Even though none of us had spoken to each other prior to the forum, our answers to shop owner
and technician questions regarding parts quality and country
of origination were almost identical. Here are some of the questions we were asked.

Tier 1 OEM Suppliers vs. the Basement at AAPEX

The bottom line from myself and my friendly competitors
sharing the "What's in the Box" platform was that if you're a
Tier 1 OEM supplier you're going to make sure the part in the
box matches the quality reputation of the brand. Period!
At the annual AAPEX show there's an upstairs with high ceilings for the elaborate displays set up by all the high-quality auto
parts and tool manufacturers who cater to the aftermarket service business.

What is the difference between OEM, OEM-level and OES?

Within the same convention center in Las Vegas where APPEX is held there is a lower level (basement) with an 'ocean' of
small booths representing tiny start up auto parts companies
from other countries (many from China). Some of these companies build quality parts at lower costs. Others produce low quality knock off parts at even lower prices. Recall those notorious
fuses that wouldn't blow when the current exceeded their ratings? Those fuses are retailed by those super low-cost discount
tool wholesalers doing business out of your local strip mall or
flea market. They were sourced from "the basement at AAPEX"
and now they've burnt up your customer's wiring harness!
Cheap can sometimes be really expensive!

Companies who directly supply the OEM (original equipment manufacturer) automakers are referred to as Tier 1 OEM
suppliers. Quality standards for Tier 1 OEM suppliers are brutally demanding. Those companies live (or die) by their reputation with all their customers, both OEM and aftermarket.
Over the course of the last three decades, I've seen OEM standards (related to defects) sharpen from tracking PTV (per thousand vehicles) to PMV (per million vehicles) with single digits
being the goal. Imagine if you only experienced eight problem
parts for every one million cars you repaired!

April 2020

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MACS Monthly Newsletter - 2020

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