DETROIT - ITT Automotive has launched an ambitious program to reduce the defect rate of components shipped to its customers by 90 percent this year.
The $5.1 billion parts supplier wants to reduce its defect rate to roughly 40 for every 1 million parts shipped in North America.
The company is doing so at a time when automakers such as General Motors and Ford Motor Co. are taking unprecedented steps to pressure suppliers to improve quality.
In May, GM announced it would saddle suppliers with warranty repair costs unless they could fix the problem in 90 days. Ford has put some suppliers on probation because of quality problems.
So far this year, ITT Automotive has made progress. One of its star performers is the brake division, which averages 20 defects per million parts. That's down from 162 in the last three months of 1996.
But other divisions aren't doing as well. One product line has suffered a defect rate of 1,200 per million. ITT calls those high defect rates 'quality spills.' They can have a serious impact on ITT Automotive's relations with its customers, said Dennis Racine, vice president of purchasing. 'Quality spills weigh heavily when automakers make future sourcing decisions,' Racine said. 'We plan to correct this - pronto.'
So ITT is pushing its own suppliers to reduce defects 90 percent. The suppliers have made progress, but they still ship parts with eight times more defects than ITT's finished products. That forces ITT to inspect and reject parts shipped from suppliers, costing millions of dollars.
According to ITT Automotive's rating system, 24 percent of its suppliers have unacceptable performance on quality and on-time deliveries. An additional 14 percent are marginally acceptable.
Suppliers that don't meet ITT's goals eventually may find themselves looking for another customer. Since 1993, the company has reduced its number of first-tier suppliers from 1,565 to 864. By the end of the decade, ITT Automotive wants to do business with only 300 suppliers.
ITT Automotive is No. 13 on the Automotive News list of top original-equipment suppliers to North America.