How hastened decisions affect the business in the long term

Why there is a need for VA/VE in the running products

In the developing nations like India, the prices hikes are putting burden on the customers pockets, prevent them from buying thins which they can't afford. The option left behind is to produce economical, on the other hand raw material, labor, electricity prices are continuously going up generating hurdles in the way to produce economical. High govt. taxes leaving little margin in the pockets of OEM.

In such emerging situations, OEM's are adopting high VA/VE activities in order to prevent price hikes and tuned in line with the market competition.

No. One reason is competition

Competition is the driving force keeps alert the market against the price hikes, customers prefer lower prices with high features in every vehicle.

Second factor is the price war

Raw material, labor and electricity prices are going up, putting pressure on OEM to squeeze their margin or to find alternative ways in order to stay with in competition. Which has created a price war, that means to sell at lowest prices with high payout features.

3rd is high fuel prices

Govt. has imposed high taxes on the fuel, result in demand for high fuel efficient vehicles.

4th is to increase the sales

For a smaller business to grow into a big business, there is a need to generate the network of sales. The success of product and brand building plays major role in the course of actions.

5th is to grow your business

The secret of a growing business is to sell to the every layer of the community, the target of big business is not the 10% rich population, who demands luxury. But the 90% poor and middle class who need economy.

6th - employee justify their role

For a new business in domestic area, there is a continuous demand to keep your prices on the baseline.

In that case the main role of the employee is to continuously looking for the challenging ways to reduce the product cost to justify his job, whose salary is also counted as an overhead.

7th - employees growth

Some employees are forcing suppliers to forcefully reduce their part cost in any manner, no matter whether it should be inferior in quality function. Such employees gets a fair short term growth and many more incentives till the luck stay golden.

Pressure from the customer

In this post i am going to share with you the real time incident, which cost major OEM should have to cost on it's reputation in the market place, luckily they survived due to timely action and wise strategy.

The customer management was putting pressure on the supplier to forcefully do some value addition, which once they have refused due to amount of risk involved.

Squeezing development cycle

Once the supplier business was on stake, they have reduced the development time by skipping some major steps in development cycle. The value addition in the structural part was being asked about nearly 20% of price value.

Skipping testing and validation

Once the drawing was approved by the OEM,, they have planned their proto launching event in very hastened way. The supplier has submitted samples without testing validation. Even though the OEM has launched the vehicle without physically trying out or testing out.

Field failure start to receive just after 3rd month of launch

After the 3 months of product launch there was a big failure, the structural part undergoes crack with in one third time span of total warranty period from the one dedicated area of Punjab state. The incident reported by agency owner for two tractor models.

With in 15 days of time there were the warranties from the different areas such as Bihar, Uttarakhand. My team has visited the areas along with customer service teams, the issue was clear to us before it was being explained by anyone.

Part crack in circular periphery

1600 vehicles recalled

As a countermeasure, the sales data was taken from dealer network around the country. Finally, there were 1600 vehicles being sold all around, the road map was being made to replace the New parts with the old model. Since, the old model was running successfully before the launch of VA variant.

The tractors were called by the dealerships for free preventive checkup and faulty rims were being replaced free of cost.

Field failure investigation

The result of field investigation was that the New VA rim is suitable for agricultural applications, however failed to sustain the haulage applications and the areas where there is a sand mining, the parts were overloaded and being cracked. Since the old design has a more Factor of safety, therefore able to sustain overload.

Root cause investigation while comparing with similar vehicles in the market

Being hastened in launching was the key reason of failure

The failure could have been arrested, if the part was validated properly before launch. The hastened launching and skipping main milestones of testing was the key reason of failure.

The ignorance of supplier expertise leads to the launch of faulty products.

Further action to conclude

The customers which have faced major breakdown, lost confidence in the brand. Even though the concrete action has taken to replace the faulty parts by any means. Still there are many steps missing, there is a need to refine the whole process of product launch.

Long term impact on the business

Loosing confidence in launching next VA/VE activities

After the incident, the all ongoing VA/VE activities has been put on hold, which are even more genuine in nature. Some customers have lost their faith, management has lost the confidence in their launching process and supplier has been put in red category. It may takes years of time to revive from such incidents.

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