A Case Study: Best Practices for Automotive Parts Import Safety bradley a. pritts the bradley group detroit, michigan usa [email protected] 19th Annual.

A Case Study: Best Practices forAutomotive Parts Import Safety

bradley a. prittsthe bradley group

detroit, michigan [email protected]

19th Annual International Conference on ISO 9000 © 2011 Bradley A. Pritts

Best Practices for Automotive Parts Import SafetyScope of Presentation

• National Highway Traffic Safety Administration-- Regulatory Approach, with focus on import safety

• Company Case Background & Goals– HDBrakes Company engaged in manufacturing/

Importing/ Assembly – Heavy Duty Truck Drum Brake components (Disguised case)

– Specific focus: Ensuring product safety for imported components


Best Practices for Automotive Parts Import Safety


Products Heavy duty brake components – brake shoes, friction material, “hardware” – springs, rollers, clips, fasteners



Suppliers Organization’s own factory, plus 7 small to medium size Chinese factories



End Products -- “Wheel end kit” – all parts needed for brake shoe replacement

-- Individual parts available separately (unlined shoes, friction, hardware)



Experience Manufacturing over 50 years.

Importing from China for 10 years

10 – 20 cargo containers per month imported



Best Practices for Automotive Parts Import SafetyImport product hazards gain visibility


Product Hazards – All Products

Big increase in visibility in mid 2000’s, particularly as imports from China increased

Best Practices for Automotive Parts Import SafetyHazardous import incidents


•2004: Drywall with hydrogen sulfide emission

•2006: Pesticide/ Drug Residues in farm-raised seafood lead to import alert requiring compliance testing

•2007: Melamine in pet foods, killing some pets

•2007: Toothpaste contaminated with diethethylene

glycol (identified and contained before any casualties)•2007: Toys with lead paint, other lead content (some exposure, effects unclear)

Best Practices for Automotive Parts Import SafetyGovernment Response

President Bush convenes a cross-agency task force (CBP, FDA, CPSC, EPA, NHTSA, ATF…)






Approach Continue reliance on private sector, with increased education, preventive efforts, and enforcement

Best Practices for Automotive Parts Import SafetyNational Highway Traffic Safety Administration Background


Created by Congress and chartered to improve highway safety, through attention to highways, vehicles, drivers, and related jurisdiction

(Coordinates with EPA, who regulate emissions issues)

Acronym: NHTSA (nit-sa)

Auto and truck enforcement includes responsibility for parts and certain equipment items (e.g. motorcycle helmets and infant safety seats), but the primary emphasis is on the full vehicle and its major systems

Goal is to minimize (and someday, eliminate) highway injuries and fatalities

Best Practices for Automotive Parts Import SafetyNHTSA Regulatory Approach

– Most of the standards apply to the vehicle system rather than individual components.

– Most standards are performance-based based rather than prescriptive

• Example: brake systems judged by stopping distance, hill hold test performance

– Primary responsibility given to manufacturer/ importer, who must warrant compliance and safety


Best Practices for Automotive Parts Import SafetyNHTSA Regulatory Approach


Compliance testing: occasional random sampling, complaint/ defect investigation driven

No specific “good manufacturing practices” standards, as are used in FDA and certain other agencies

Private product liability litigation is very active, supplementing regulatory controls

Best Practices for Automotive Parts Import SafetyNHTSA Approach: How well is it working?


Bottom line: transportation safety continues to improve!

While transportation volumes continue to increase, fatalities have been shrinking in both absolute and relative terms.



Total US Fatal Crashes and Casualties - 1999 - 2009

0

10,000

20,000

30,000

40,000

50,000

Fatal CrashesTotal Fatalities



US Casualty Incident Rates - Deaths - 1999 - 2009

0

5

10

15

20

25

Per

100

,000

0

1

2

3

4

Per

100

Mil

lio

n M

iles

per 100,000 Population

per 100,000 Registered Vehicles

Per 100 Million Miles Traveled

Best Practices for Automotive Parts Import SafetyWhile any crash is bad…


Best Practices for Automotive Parts Import SafetyMajor safety problems are driver behavior issues


Contributing factor Present

Not staying in lane/on the road

24%

Excessive speed 21%

Driver alcohol impaired 14%

Driver distracted 9%

Next 10 specific factors 31%

Best Practices for Automotive Parts Import Safety Major safety problems are driver behavior issues

– Drivers/ occupants unrestrained in 55% of fatalities

– Vehicle defects don’t even make the list!


Best Practices for Automotive Parts Import SafetyBut: vehicle safety picture isn’t perfect!


Consumer complaints to NHTSA

30,000 per year

Recalls – mandated and voluntary (2006 – 2008)

524 recall campaigns

23.5 million vehicles affected



Ford Explorer – 203 rollover deaths 1990 – 2002



Toyota sudden acceleration related complaints: 89 deaths, 2000 - 2010


Parts imports: Some NHTSA activity, but infrequent (and often initiated by the private sector: e.g. passenger car brake rotor concerns raised by domestic brake manufacturers)


Best Practices for Automotive Parts Import SafetyNHTSA’s response to import safety:


No new regulations established. (Current regulations already impose strict liability.)

Continue international discussions on safety regulations, particularly toward harmonizing existing regulations across nations

Study and educate industry on their existing legal obligations and best practices for performance and compliance

Best Practices for Automotive Parts Import SafetySummary of the Best Practice guidelines


Fully understand the Importer’s Obligations under US law

Exercise great care In Selecting Manufacturers and Establishing Business Plans

Inspect foreign manufacturing facilities, evaluating the company, factory and staff

Inspect Goods (either before they are exported or distributed)

Identify the product

Establish a Customer Service Program

Best Practices for Automotive Parts Import SafetyBest Practice guidelines as published


Best Practices for Automotive Parts Import SafetySummary of the Best Practice guidelines


Best Practices for Automotive Parts Import SafetyExample detail – Section 2 (Excerpt)


…

(i) Establishing a Business Plan

International trade presents unique risks. A company engaged in importing

foreign manufactured goods or considering becoming an importer

should have a complete and detailed business plan. The plan should reflect

careful consideration of the following questions:

• Who will determine the specifications for the product?

• On what basis will the product specifications be developed?

• Who will design the product?

• Who will verify the product’s design?

• What laboratory and field tests will be undertaken?

• Who will test product prototypes? ….

Best Practices for Automotive Parts Import SafetyOriginal Text Example: section 2 (Excerpt)


(iii) Product Design Considerations

It would be advisable for the importer to focus on the specifications for, and design of, the product and the requirements of all applicable FMVSS covering the product that it wishes to import before beginning negotiations with a prospective overseas business

partner. The importer should be well informed about U.S. import regulations and any FMVSS requirements that cover

the products the importer intends to import. Before discussions take place with a prospective fabricating manufacturer, it may be worthwhile for the importer to have translated into the

language used by that manufacturer the FMVSS that are applicable to the product and the agency regulations pertaining to manufacturers located outside the United States.

Best Practices for Automotive Parts Import SafetyRestatement example – section 2 (Excerpt)


Original Text Restatement

International trade presents unique risks. A company engaged in importing foreign manufactured goods or considering becoming an importer should have a complete and detailed business plan. The plan should reflect careful consideration of the following questions:

A company engaged in, or considering, importing foreign manufactured goods should have a complete and detailed business plan. The plan should reflect design/ development responsibilities as follows:

- Who will determine the specifications for the product?

Responsibility for determining specifications should be established.

-On what basis will the product specifications be developed?

A method for developing specifications should be established.

Best Practices for Automotive Parts Import SafetyRestatement – section 2 (Excerpt)


Original Text Restatement

On what basis will the product specifications be developed?

The method for developing specifications should include (Design input):

-FMVSS requirements

-Legal import requirements

-A study of the OEM part, if any

-Product performance objectives

-Accepted national/ international product standards, if existing

Best Practices for Automotive Parts Import SafetyExample detail – section 2 (Excerpt)


Restatement Self-Assessment

Responsibility for determining specifications should be established.

HD Brake maintains responsibility for determining specifications.

A method for developing specifications should be established.

HD Brake has a series of procedures for determining specifications which includes FMVSS requirements; product functional requirements and performance objectives…

Best Practices for Automotive Parts Import SafetyExample detail – section 2 (Excerpt)


Self-Assessment Improvement Goals

HD Brake maintains responsibility for determining specifications.

None required.

HD Brake has a series of procedures for determining specifications which includes FMVSS requirements; product functional requirements and performance objectives…

Need to develop a routine means for scanning FMVSS and other

industry requirements for changes.

Best Practices for Automotive Parts Import SafetySelf-Assessment Summary


Practice 1. Fully understand importer’s obligations

Strengths Long familiarity with regulations; evidence of consistent compliance

Areas for Discussion

Need for ongoing monitoring of regulatory activity

Improvement goals

Designate responsibility and quarterly review of regulatory/ legal activity.



Practice Exercise great care In Selecting Manufacturers and Establishing Business Plans

Strengths Depth of engagement with supplier factories (as well as competition and potential suppliers); well established approach


Corporate/ company structures are not always transparent, and may not be fully understood.

Improvement goals

Expand our attention to corporate-level issues: company ownership, land “ownership”, local position and references





Practice Inspect Goods (either before they are exported or distributed)

Strengths Third party inspections to demonstrate factory competence; random checks once competence shown; ongoing shop floor process audits


Ongoing inspection program focused on low cost, easy to measure characteristics, may be neglecting important attributes

Improvement goals

Establish annual re-verification of FMVSS compliance

for friction (need to agree on financial responsibility)





Practice Identify the product

Strengths Friction, brake shoes identified with lot codes. All legal requirements for identification in compliance.


Brake hardware identified only at the kit (package) level; records do not clearly show factory of origin

Improvement goals

Develop recordkeeping system to track lots by factory

of origin.





Practice Establish a Customer Service Program

Strengths Close customer contacts through customer service personnel; history/ reputation addressing product issues; experience with containment


Current lot control system depends on customer packaging for lot information (for brake hardware)

Improvement goals

Consider establishing recordkeeping of specific lot codes during shipping process (depends on new

warehouse management software, under study.)

Best Practices for Automotive Parts Import SafetyLessons Learned – Company Perspective


-The original document as issued by NHTSA is conversational in style; this helps its readability but does not support systematic self-assessment.

-A restatement for self-assessment can make the process more effective.

-While the company has done numerous full management reviews of the QMS, a safety-focused review brought new insights.

Best Practices for Automotive Parts Import SafetyLessons Learned/ Observations – National viewpoint


- The overall record of vehicle and component safety has continued to improve; it is too soon to say whether the NHTSA effort has made positive contributions but at the very least there is no evidence of unfavorable trends.

- During informal discussions, few quality professionals were aware of the document’s existence. More promotion of the document could be beneficial.

Best Practices for Automotive Parts Import SafetyPotential Research Questions


- Different agencies pursued different strategies – promoting best practices, increasing inspections, emphasizing international standardization. Comparison of the overall results could give useful policy guidance.

- Broader study of a sample of automotive importers could provide an overall perspective on actual deployment of these practices, and corresponding risks.

Best Practices for Automotive Parts Import SafetyWrap-up!

Thanks for your attention!

For more info, contact: Brad Pritts …… [email protected]

001 734 834 3675


A Case Study: Best Practices for Automotive Parts Import Safety bradley a. pritts the bradley group detroit, michigan usa [email protected] 19th Annual.

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