Overview

Quality issues in automobiles can not only result in commercial implications for the manufacturer, they also become life-threatening for customers and can severely damage reputation of the automotive company. In order to manage such crises, automakers need to comply with the Transportation Recall Enhancement Accountability and Documentation (TREAD) Act and diagnose the impairment, thus nullifying further recurrence of the impairment.

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Recalls by Leading Auto Major Highlights the Need for Improved Compliance with Safety Norms

TREAD mandates vehicle manufacturers to report to NHTSA once it conducts a safety recall or some safety campaign in a foreign country. In order to manage such crisis, automakers need to comply with the Transportation Recall Enhancement Accountability and Documentation (TREAD) Act and diagnose the impairment, thus nullifying further recurrence of the impairment.

Recall events present serious repercussions for automotive companies:

  • Attorneys can take legal action against the automaker over possible deceptive claims made to consumers about the safety of their cars. The automaker faces the grim prospect of legal crises, market failures, and a potential product ban.
  • Regulatory bodies will focus on whether the automaker or NHTSA (National Highway Traffic Safety Administration) failed to properly deal with safety complaints or address them quickly enough.
  • Panic amongst customers can escalate the number of support and service requests.

However, the biggest impact of all for the automaker would be a dent in its brand and reputation, loss of customer faith, and adverse impact on future sales.

To conform to TREAD, automotive companies need to furnish a number of reports including:

  • Quarterly Early Warning Reports
  • Foreign Safety Recall
  • Monthly Reports
  • Field Reports
  • External Communication
  • Fatality Report
  • Injury Report
  • Production Report
  • Report on Published Documents
  • Death and Injury Reports
  • Property Damage Reports
  • Consumer Complaints
  • Warranty Claim Reports

With the “Early Warning” deadlines and submission of varied reports, the NHTSA collects data, records trends, and warns consumers of potential defects in vehicles. The TREAD Act stipulates several complexities, necessitating external sources of assistance to eliminate errors and omissions.

Systematic Auditing: Automotive companies must ensure that suppliers undergo audits as a way to ensure safety and minimize liability. Today, companies need more than just a monitoring agency; they need a systematic and workflow driven audit process across the manufacturing chain that not only identifies but also rectifies the problem areas.

Audit Efficiency: Large automotive companies need an efficient audit process and a powerful audit tracking system. They not only need audit tools and technology to do more audits with same resources, but also need to handle comprehensive audits covering a number of areas in manufacturing operations.

Auditing the Value Chain: To be truly effective in preventing adverse events and driving ongoing compliance with quality and regulatory standards, audits must encompass the entire value chain comprising suppliers, environment, facilities, training, documentation, and equipment.

Audit Scores and Thresholds: When trying to quantify something, you need a benchmark, or a standard with thresholds that indicate what is acceptable and what is not. The audit scoring mechanism should be based on sound logic, judgment and proven algorithms with appropriate conditional checks. For example, if the number or severity of problems exceeds certain threshold, it should reflect in the overall audit score and trigger alerts that cannot go unnoticed.

Closed Loop Audits: Occasionally, auditors may also complain that companies do not follow their recommendations. In such cases, a closed loop audit process that can address audit findings and ensure validation of corrective/preventive actions can be very handy. Companies should ensure that an audit does not close until the findings in the audit report are fully addressed through corrective and preventive actions (CAPAs), even if that requires validations and re-audits.

Quality issues in automobiles can not only result in commercial implications for the manufacturer, they also become life-threatening for customers and can severely damage reputation of the automotive company.

To track and monitor every intricate step of complying with such safety norms and regulations, precision and meticulous reporting is needed. MetricStream’s integrated Enterprise Compliance Platform provides extensive features to address each of these elaborate requirements efficiently. The highly scalable, flexible, and user-friendly Governance, Risk and Compliance (GRC) solutions offered by MetricStream can significantly ease the burden of compliance tracking and reporting of companies and will allow them to focus on consolidating their core business and achieving increased operational efficiency.

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