Rejecting Customer Specific Requirements - Can we? Negotiating with Customers

F

Filip M.

#1
Hi,

We go for the TS16949 and we are a second tier.

We don’t have the intention to accept any “Customer Specific Requirement” of our customers. We have customers like Bosch, Valeo, Visteon, …

At this moment, we haven’t received yet any CSR of them.

Is it to us to check out they have CSR’s ? And if they have, can we negotiate with them in that way that we reject this CSR ?

Do we have to prove (anything of) this to our certification body ?

Has someone any experience with that ?

Thanks in advance for an answer.

Filip
 
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Jim Wynne

Staff member
Admin
#2
Filip M. said:
Hi,

We go for the TS16949 and we are a second tier.

We don’t have the intention to accept any “Customer Specific Requirement” of our customers. We have customers like Bosch, Valeo, Visteon, …

At this moment, we haven’t received yet any CSR of them.

Is it to us to check out they have CSR’s ? And if they have, can we negotiate with them in that way that we reject this CSR ?

Do we have to prove (anything of) this to our certification body ?

Has someone any experience with that ?

Thanks in advance for an answer.

Filip
Everything is negotiable. That doesn't mean that you'll necessarily get very far in the negotiations, but contract review is all about reviewing everything you and the customer require and deciding whether it's worth doing or not. If you do succeed in getting customers to waive normative requirements, the waiver will have to be explicit, in writing, and signed by a customer representative who has the requisite authority. A telephone call or e-mail message from an SQE who says "don't worry about it" won't be enough.
 
R

ralphsulser

#3
Visteon definately has CSRs and I have been 3rd party audited to them during our TS16949 certification conformance audit. We were told that it is your(supplier) responsibililty to regularly puruse their web site to find out what is new and required.They surprised us twice by initially posting their CSRs and the again when they issued an update drevision. Their SDEs or other customer contacts made no mention of these posting or revisons. I found out here on the Cove first, and not from Visteon.
 

Wes Bucey

Quite Involved in Discussions
#4
Document! Document! Document!

I think Jim Wynne is right on point when he says, in effect, "Everything is negotiable, but :ca: by getting documentation of waivers from someone of apparent authority at the customer."

The way waivers work in actual practice varies from customer to customer. One customer of mine required a Xerox copy of the waiver included in the shipping documents of EVERY shipment. Another customer changed his own receiving inspection work instruction to take notice of the standing waiver for our company.

The way the customer wants you to help him keep track of the waiver is an important part of the negotiation for the waiver - make sure you cover that aspect!
 

Jim Wynne

Staff member
Admin
#5
Wes Bucey said:
The way the customer wants you to help him keep track of the waiver is an important part of the negotiation for the waiver - make sure you cover that aspect!
Yes--this is important if you don't want shipments rejected by receiving clerks/inspectors who didn't get the memo.
 
R

ralphsulser

#6
Visteon does have a waiver process and document to submit if you are not ready to conform with all their requirements. Contact you SDE for details and a copy can be e-mailed to you. I didn't need one but one was offered in case we ran into something that needed extra time.
 
M

Murphys Law

#7
Filip M. said:
Hi,

We go for the TS16949 and we are a second tier.

We don’t have the intention to accept any “Customer Specific Requirement” of our customers. We have customers like Bosch, Valeo, Visteon, …

At this moment, we haven’t received yet any CSR of them.

Is it to us to check out they have CSR’s ? And if they have, can we negotiate with them in that way that we reject this CSR ?

Do we have to prove (anything of) this to our certification body ?

Has someone any experience with that ?

Thanks in advance for an answer.

Filip
------------------------

Good luck on rejecting the CSRs. It really depends on who has the purchasing power. If you are the sole supplier of that product that they cannot get elsewhere, then you may be able to get away with it. This is MBA classes is called 'purchasing power'. For example in the PC world look at Dell and what they can and cannot control.

When it comes to Software, Microsoft dictates the T&Cs for how they did business with PC manufacturers so they have the purchasing power. If Dell didn't like it, tough. Dell would love to ditch Microsoft but cannot.

For microprocessors, Intel has more purchasing power but with AMD in the background, they have to be carefull on how they play their hand.

Dell however can dictate to a hard disk drive manufacture T&Cs for business. If hard disk drive company such as Seagate didn't like it, they wouldn't get the business with Dell. There are other competitors would would accept it.

Now to come back to your situation. Even if they did accept you ability to do business your way, they will remember that for future business and should someone say that they can conform to their requirements, they will design you out.

Secondly, your TS16949 certificate should depend on your ability to service customer specific requirements. Even if the post it on their website but don't tell you, then you are violation !

Outside TS, you need to follow the paper trail on how they give you orders. If it very likely each PO refers to a piece part specification, which in that specification refers to other general specifications - These are your CSRs.

If you are ignoring them or have not CYA, then legally by accepting the order you are in breach of contract. You need to negotiate closure on that with a corporate waiver or on every Sales order you accept and ship, include some legalize documentation disclaiming all TIer 1 requirements. That approach will not win you many friends and may not be work especially as much business is now international and who knows what T&C's exist.

I understand your problem. Like History, TS16949 was written by the victors. It does not fair. However, that attitidude can lead to a day when companies walk away from automotive business. Intel did this in late 90's where they said the cost of servicing the business is too much. My opinion is the automotive world want something for nothing: They want military level quality at commercial prices. Crosby said thay Quality is free but with the overhead of automotive service quality is something else.
 

Wes Bucey

Quite Involved in Discussions
#8
Murphy's Law said:
------------------------

Good luck on rejecting the CSRs. It really depends on who has the purchasing power. If you are the sole supplier of that product that they cannot get elsewhere, then you may be able to get away with it. This is MBA classes is called 'purchasing power'. For example in the PC world look at Dell and what they can and cannot control.

When it comes to Software, Microsoft dictates the T&Cs for how they did business with PC manufacturers so they have the purchasing power. If Dell didn't like it, tough. Dell would love to ditch Microsoft but cannot.

For microprocessors, Intel has more purchasing power but with AMD in the background, they have to be carefull on how they play their hand.

Dell however can dictate to a hard disk drive manufacture T&Cs for business. If hard disk drive company such as Seagate didn't like it, they wouldn't get the business with Dell. There are other competitors would would accept it.

Now to come back to your situation. Even if they did accept you ability to do business your way, they will remember that for future business and should someone say that they can conform to their requirements, they will design you out.

Secondly, your TS16949 certificate should depend on your ability to service customer specific requirements. Even if the post it on their website but don't tell you, then you are violation !

Outside TS, you need to follow the paper trail on how they give you orders. If it very likely each PO refers to a piece part specification, which in that specification refers to other general specifications - These are your CSRs.

If you are ignoring them or have not CYA, then legally by accepting the order you are in breach of contract. You need to negotiate closure on that with a corporate waiver or on every Sales order you accept and ship, include some legalize documentation disclaiming all TIer 1 requirements. That approach will not win you many friends and may not be work especially as much business is now international and who knows what T&C's exist.

I understand your problem. Like History, TS16949 was written by the victors. It does not fair. However, that attitidude can lead to a day when companies walk away from automotive business. Intel did this in late 90's where they said the cost of servicing the business is too much. My opinion is the automotive world want something for nothing: They want military level quality at commercial prices. Crosby said thay Quality is free but with the overhead of automotive service quality is something else.
This is all true to a more or less extent, depending on where you fall in the supply chain as a supplier. The tradeoff as a seller is always "what makes more economic sense?"

When I was running a high-tech machine shop, we avoided the supply chains where customers wanted to auction their business instead of negotiate their business. If we weren't able to have a close enough bond to discuss and negotiate some "customer specific requirements" and only deal with those that made sense for the particular custom product we were making in terms of form, fit, function, and safety, then we just excused ourselves from doing that business.

I recognize every company is NOT in a position to do that. For better or for worse, they have themselves in a trap where they are at the mercy of the customers.

In the 50's, 60's, 70's, 80's, into the 90's, companies like Sears consciously angled to become the biggest customer for each of their suppliers and then, WHAM! BANG! no more Mr. Nice Guy. Sears began to turn the screws on their suppliers, squeezing their profit margins down to nothing.

However good Sears was at this ploy, today's Walmart has turned it into a science and effectively forced their supply chain to "bust their unions" and outsource to low wage countries to meet the Walmart "price point." Along the way, many of the goods have become shoddy and style and innovation are forgotten memories. Business schools in my day termed the process "commoditization" - where products from all producers lose their individuality and become "fungible" where any product from one producer may be freely interchanged or traded for one from another producer without payment of a premium.

A dollar bill is fungible - its only stamp of individuality being the serial number. Similarly, bushels of wheat and corn and most other commodities are fungible.

Fungibility may be OK for products like nails and screws, but probably not OK for folks who want stylish clothes or cutting edge electronics or sports equipment.

The net result of commoditization is that the commodities become drab and the minority goods with style and innovation become rarer and rarer and pricier and pricier, contributing further to a wide disparity between the haves and the have nots in society.

Along the way, the middle class of society disappears and only the vast majority of poor with a tiny minority of wealthy remain.

Economic statistics confirm that the very wealthy continue to add to their net worth through good economic times or bad, but the erosion of the middle class is what contributes to the wealth of the very richest segment of society. The worst situation is when the middle class are blind to the process and willingly contribute to their own downfall by cheering the demise of unions and independent producers. When they willingly give up buying new and innovative products and go for low priced food, goods, and services (buying strictly on price), they unwittingly contribute to their own economic erosion because the companies producing the mediocre goods can no longer afford to pay premium wages and the custom companies who would have paid premium wages gradually go out of business.

TSK! TSK!
 
W

wslabey

#9
Wes,

Although your post is a bit preachy I couldn't agree with you more. Our firm has "niched ourselves" into a low volume market place as a cost effective supplier of short production run OEM parts. We turn away the large volume Requests for Quotation that feel more like commodity trading than parts manufacturing.
 

Wes Bucey

Quite Involved in Discussions
#10
wslabey said:
Wes,

Although your post is a bit preachyI couldn't agree with you more. Our firm has "niched ourselves" into a low volume market place as a cost effective supplier of short production run OEM parts. We turn away the large volume Requests for Quotation that feel more like commodity trading than parts manufacturing.
For better or worse, I AM "preachy." Just like any preacher giving the sermon or homily, I try not to "preach to the choir," but to the sinner in the back pew who hasn't heard the message before. The choir and faithful believers in the pews often just nod and shout "AMEN!" at the appropriate pauses. Thanks for the AMEN!;)
 
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