A Key to our Profitability

Our products never get a second chance. Continuous focus on quality is therefore key to the competitive edge of our products and our profitability.

To reach the excellent quality required for safety products, we have – for many years – applied a “zero defect”, proactive quality policy. This pursuit of excellence stretches all the way from the initial development of a new product to the disposal of the product after many years of use in a car.

To ensure that a new product is robust and that it does not have any hidden weaknesses that might appear after several years, we apply a stringent process called the Autoliv Product Development System (APDS). In 2004, we enhanced this process by introducing a new Pre-APDS standard that defines more activities in the Project Initiation Phase.

To drive global standardization as well as product improvements and cost savings, we have appointed a Corporate Design Authority with global responsibility for each product group. In this way, quality is assured – and improved – when a product is being redesigned or modified.

Supplier Collaboration

We have developed a base of some of the best suppliers in the industry, and we require them to be certified according to QS 9000 (a special automotive quality standard) or to the new ISO/TS 16949.

Our supplier selection and development process is continuously becoming more competitive since lower cost and further quality improvements are expected in our supplier consolidation program.

This consolidation program calls for a reduction from over 2,000 Autoliv suppliers to less than 500 within the next few years. In parallel to the consolidation effect, we are also increasing our component sourcing with suppliers in low-cost countries.

A new global Autoliv Supplier Manual (ASM) was released in 2004 on the Autoliv Partner Portal on the web. The ASM spells out our supplier collaboration model as well as our quality requirements to the supplybase as one global Autoliv standard.

The Autoliv Partner Portal also provides suppliers with other key information to improve efficiency, quality and cost, such as supplier performance, rating, technical specifications and drawings as well as delivery needs and volume forecasts.

Internal Quality

All of our own facilities are certified to QS 9000 and are also in the process of being certified to the new edition of ISO/TS 16949 (see graph).

In manufacturing, Autoliv’s “zero defect” policy means that no defective materials should enter the production lines and that no non-conforming intermediate products or finished products should be passed to the next stage. Weight sensors, cameras and other checkpoints for error detection are therefore installed at critical stations throughout the manufacturing process.

We measure quality performance in the number of non-conforming parts per million (ppm) produced. This includes both internal rates from scrap, re-work, etc. and external rates in the form of customer rejects (primarily caused during or after delivery). Our overall target is to stay below 10 ppm, in line with most customers’ targets.

To reach such excellent quality we use different tools to reduce scrap rates, number of re-worked parts and customer ppm. A Lessons Learned process is used to share knowledge about problems and to drive implementation of solutions throughout the organization. This has been further rolled out in 2004.

Kaizen and Six-Sigma were introduced in 2001. Since then, over 200 Six-Sigma projects have been completed, leading to significant quality improvements and cost reductions.

Customer Support

Reputation for excellence, earned by an outstanding quality record during many years, is a competitive edge in the automotive industry. We are committed to remain in the elite group of top-performing suppliers.

To give our customers even better support, we have appointed “Customer Quality Windows”. Every such “quality champion” creates an individual interface between the customer and Autoliv.

This has been found to be an efficient means of increasing our understanding of specific customer needs and expectations. We have also appointed “Customer Product Authorities” who have a similar interfacing role for product development. Improved communication has proven to be a key factor for continuous quality improvement.

Based on successful results and Lessons Learned from global Autoliv Quality Improvement (AQI) programs during the past few years, we have further enhanced our AQI activities. The aim with these activities is to continuously supply high quality products from all Autoliv facilities and to improve the position and ranking on the customers’ lists of top performing suppliers.

All these actions are key to our profitability.

	Awards From Customers During 2004, Autoliv continued to receive several customer awards. In the photo, our representatives in Thailand receive the “Year 2003 Best Supplier Award” from Toyota.
	Certifications At the end of 2004, over 80% of Autoliv’s facilities were certified to the new automotive standard ISO/TS 16949. Combined sales of these companies represented 95% of consolidated sales, which means that we met our target for 2004. In 2005, virtually all plants are targeted to have this certification.