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          May 26, 2020

          CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING No. 39

          Newsletter

                             

          CHINA AUTOMOTIVE SUPPLIER

          QUALITY MANAGEMENT BRIEFING


          Vol. 4, No. 5, May 2020


                                                                             






          1





          How to ensure your long-term suppliers' “continuous” quality compliance

          In supplier selection and management, some large international purchasing consortiums or buyers will conduct on-site audits or sometimes even supplier management and product development, by either themselves or some authorized professional service providers, based on their own purchasing characteristics. No matter how the audits are conducted, we refer to these as second-party audits. The key to “continuous” quality compliance for products purchased over a long-term period is to monitor the suppliers’ quality capabilities of their product realization processes through 2nd party audits.

          What is process quality?

          Process quality can be divided into four sub processes: development and design process quality, manufacturing process quality, use process quality, and service process quality. Here we’ll elaborate more on the manufacturing process quality capability:

          Process quality capability, also known as engineering capability and process capability, refers to the ability to produce qualified products when the process is under control. It is the ability of the production process to meet the process quality requirement; it measures the internal consistency of the manufacturing process in order to obtain the minimum quality fluctuations under the most stable state.

          What are the consequences of the product quality failing to continuously meet customer requirements?

          For any supplier selected by the buyer, regardless of its quality management level, the supplier should have the ability to supply qualified products. Without the capability, they would not have been included in the qualified supplier list when suppliers are initially selected.

          The selected supplier sometimes fails to continuously meet the quality requirements, in other words, the quality of one batch of products from the supplier can meet the customer's requirements and is considered as qualified, while the quality of another batch or part of it cannot meet the customer's requirements and are considered as unqualified. For the buyer, it is impossible to return the whole batch of goods, as it may directly cause the end customers to not receive the goods when the sales season comes, thus damaging the customer reputation.

          What can we do? In order to avoid rejection of the whole batch of goods, the buyers usually refer to the following: they will invest human and financial resources and resources needed for inspection to conduct incoming inspections with random samples for each batch and rely on the results to determine the acceptance of the batch in question. For inspections with random sampling, the risk is that the samples qualified through a sampling inspection do not necessarily mean that there is no unqualified product in this entire batch. Similarly, the unqualified samples from sampling inspection do not mean that all goods in this batch are unqualified.

          Meanwhile, we know that when purchasing raw materials, a considerable part of factories will take into consideration the risk of defective items on production, so that the actual purchase quantity of raw materials is increased in order to fulfill orders through increased safety stocks. The additional purchase cost of raw materials will be factored into the final product costs which are borne by the final customers. The bottom line is that product quality failing to continuously meet customer requirements will also bring invisible and unnecessary losses to the customers.

          To be continued.


          By Felix SS YUAN


          2





          Air Filters

          The function of the air filter is to filter out the dust (fine solid particles), pollen, and other impurities in the air, to ensure that clean air enters the engine for combustion. The main causes of air filter failure are that the air filter is in poor condition or the quality is not up to standard, causing the impurities in the air to enter the combustion chamber. With these unclean and tiny particles entering the cylinder, the engine fuel efficiency will be reduced leading to engine wear.

          Main failure modes:

          First, the tightness fails to meet the requirements; second, the filtering effect decreases.

          The failures would result in the insufficient intake air, reduced engine performance, increased pollutant emissions, increased fuel consumption, engine difficult to start, and accelerated oil aging.

          Preventive measures:

          For the manufacturers, the selected sealing materials and filter paper should meet the requirements, the gap in the sealing part should be minimized; for the consumers, it is recommended to select branded air filters and regularly maintain the vehicles and replace the air filters according to the manufacturer instructions.

          Some vehicle users fail to pay enough attention to the quality of air filter and their influence on the engine. They often use compressed air to clean the air filter when maintaining vehicle so as to extend its service life. However, this practice is not only ineffective but also damaging to the engine.


          By Felix SS YUAN


          3





          RoHS

          RoHS stands for Restriction of Hazardous Substances. The original RoHS, also known as Directive 2002/95/EC, originated in the European Union in 2002 and restricts the use of six hazardous materials found in electrical and electronic products. Directive 2011/65/EU was published in 2011 by the EU, which is known as RoHS-Recast or RoHS 2 and includes a CE-marking directive. Directive 2015/863 is known as RoHS 3 and adds four additional restricted substances (phthalates) to the list of six. 

          Any business that sells applicable electrical or electronic products, equipment, sub-assemblies, cables, components, or spare parts directly to RoHS-directed countries, or sells to resellers, distributors, or integrators that in turn sell products to these countries, is impacted if they utilize any of the restricted 10 substances. All applicable products in the EU market since July 1, 2006 must pass RoHS compliance.

          The RoHS Certification process includes, testing, process audit, documentation review, and certification statement.




          4





          Cost of raw materials:

          Exchange rates:

          USD/RMB: 1:7.0842



          EUR/RMB: 1:7.7005



          RUB/RMB: 1:0.0957




          May 2020



          The above information is for reference only



          5





          By now the automobile spare parts industry in China has fully recovered, with almost all factories, for both OE and aftermarket, now in normal operations. According to a recent survey of about 50 aftermarket factories covering over 20 fast-running product groups, the only visible impact on the Chinese suppliers from the coronavirus seems to be the slightly-delayed delivery dates with some factories. The survey was conducted by Shentou at the end of April.

          During the peak of the pandemic, with the general lock-down in almost all countries worldwide, we observed severe disruptions in the passenger car parts business, while the parts business for the heavy-duty vehicles were much less impacted, with business from the Middle East and South America (except Brazil) continued at almost the pre-pandemic levels.

          With Europe now just coming out of the general lock-down, factories are seeing increased orders from international buyers, including those from Europe. There is however a recent slow-down in the Middle East, partially due to the delayed impact of the coronavirus lock-down as well as the business closure during the Ramadan this year. There are also many uncertainties in Eastern Europe currently.

          As the international buyers gradually resume their previous purchasing activities, there are new challenges that because of the impact of the virus, the buyers need to work out arrangements with their Chinese suppliers creatively to handle the problems of not being able to come to China for on-site factory inspections, face-to-face negotiations, and pre-shipment inspections.






          SHENTOU SUPPLY CHAIN MANAGEMENT CO. LTD. is a Shenzhen, China, based company serving international automotive clients in the implementation of their China strategies and programs. CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING is a monthly newsletter published by Shentou to address the specific and unique quality challenges and concerns international automotive companies face with suppliers in China. Comments are welcome at qms@shentou.com. Click here to subscribe.


                             

          Copyright ? 2020 Shenzhen Shentou Supply Chain Management Co., Ltd.

          All Rights Reserved.








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