1. 2018 Supplier Associated Warranty Reduction Program
January 15, 2016
2018 Supplier Associated Warranty Reduction Program
Purchasing and Supplier Quality Operations and Integration - Warranty
August 2018

2. Supplier Associated Warranty Reduction Program (SAWRP)
January 15, 2016
Supplier Associated Warranty Reduction Program (SAWRP)
What is the Supplier Associated Warranty Reduction Program (SAWRP)?
Associated warranty measure –what does this mean?
Responsibility is not considered
Promotes a partnership between FCA and our Supplier Partners
Reduce warranty
Increase customer satisfaction
Eliminates finger pointing
Establishes warranty cost sharing
These are what separates SAWRP from other warranty programs. (read the dot points).

3. January 15, 2016
Purpose of SAWRP
The Supplier Associated Warranty Reduction Program (SAWRP) is not responsibility based, it is based on associated warranty. 
Creates an environment of cooperation between FCA and Suppliers.  As partners sharing in the cost of not meeting objectives, we eliminate the non-value added activity of blame assignment.
Reflects FCA’s Foundational Principles:
Transparency- access to FCA US Warranty systems
Collaboration between FCA US and Suppliers
Shares accountability for warranty improvements
Is a tool to compare warranty performance to a target in effort to reduce warranty.

4. SAWRP Terminology/Principles
January 15, 2016
SAWRP Terminology/Principles
SMLC – Supplier Manufacturing Location Code
LCC – Local Commodity Code/ Material Group
EWT – Early Warranty Tracking
WIS – Warranty Information System
What is the measurement period?
What does 3MIS and 15MIS mean?
What impact does the Top 300 have?
What parameters are used?
How is my warranty target established?
These are what separates SAWRP from other warranty programs. (read the dot points).

5. What is the measurement period?
WIS reporting is 6 months behind the month of build. This is due to the need to report “mature” data, and to report the Months in Service chosen by Quality organizations within the company, currently 3 MIS (Months in Service.) Below is a timeline leading to the reporting month for a month of production.
Aug
Sep
Oct
Nov
Dec
Jan
Month of Production
Includes all vehicles built and sold within 90 days
First 1 MIS number reported
First sold vehicles reach 1 MIS
First vehicles sold in August reach 3 MIS
First vehicles sold 3 MIS reported
Report Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Build Month
MIS (Aug) 3 4 5 6 7 8 9 10 11 12 13 14 15

6. What is the measurement period?
January 15, 2016
What is the measurement period?
Model Year Process Timeline
Vehicles launched prior to August will have a longer build/evaluation period
MY Production
Warranty Information System
CY Reporting
July
August
(raw warranty data in EWT)
Jan
15 MIS
Evaluation Period
3 MIS

7. XREF’s – Brick and Mortar physical address
January 15, 2016
Top 300 Supplier List
Top 300 XREFs with the most warranty claims in EWT (Early Warranty Tracking) in 2017MY.
XREF’s – Brick and Mortar physical address
Same company with multiple locations (within a close proximity)
Establishes warranty target method used for 2018MY SAWRP
Top 300 results are not appealable
These are what separates SAWRP from other warranty programs. (read the dot points).

8. What parameters are used?
Warranty Information System (WIS) Parameters
2018
2017
Select C/1000 after setting parameters

9. C/1000 Results
Example LCC (99AZ)

10. How is my warranty target established for 2018MY?
January 15, 2016
How is my warranty target established for 2018MY?
If a Supplier is identified on the Top 300 List
Determine the 2016 and 2017 Year End C/1000 for SMLC/LCC at 15MIS
Apply the 15% Improvement Factor for both years
Warranty Target for 2018MY will be the lesser of the past two model years warranty performance by SMLC/LCC
If no data exists then an average for the SMLC or LCC will be used
EXAMPLE:
If a Supplier is not identified on the Top 300 List
Determine the 2017 Year End C/1000 for each SMLC/LCC at 15MIS
Apply the 15% Improvement Factor to calculate the 2018MY target for the SMLC/LCC
Based on the SMLC/LCC C/1000 performance to the SAWRP Target, determines Supplier Share Rate (Debit) OR Supplier Credit Rate (CCM)

11. Supplier Performance Beats Target
January 15, 2016
Supplier Performance Beats Target
If a SMLC/LCC beats the Warranty Target a one time Commercial Cost Management (CCM) Credit is given.
Formula:
(Target – Actual)
Share value = 50% x
Target
SAWRP credit is not monetary. CCM Credit is used towards Material Cost Reduction Targets provided by Purchasing.

12. Supplier Performance Misses Target
January 15, 2016
Supplier Performance Misses Target
Formula:
(Actual – Target)
Share value = 50% x
Actual
Improvement Factor

13. Warranty Cost Sharing Warranty Cost Sharing (billing)
January 15, 2016
Warranty Cost Sharing
Warranty Cost Sharing (billing)
Causal factors are not subject to appeal
10 day grace period to review billing accuracy (first billing only)
Will occur monthly at the base 5 supplier code level after the 15 month evaluation period until warranty expires
Warranty coverage is coterminous and follows individual State and Federal regulations
Will be administered by the FCA US Warranty Recovery Group
Costs to include FCA US’s warranty claim reimbursements to its dealerships for parts cost, handling, and labor costs.
Costs related to Mopar handling of parts from Suppliers to dealerships, excluding any Mopar profits
For questions regarding billing:
Contact the Warranty Recovery Department by sending an directly to
Note that Warranty Cost Sharing has not changed since the launch of the program. Read through the list.

14. Major Exceptions to SAWRP
January 15, 2016
Major Exceptions to SAWRP
Recalls (not included in SAWRP claims)
Recovery will be managed using FCA US case-based methodology
Customer Satisfaction Notifications (CSNs) (not included in SAWRP claims)
Rapid Response Transmittals (RRTs) (not included in SAWRP claims)
Warranty Extensions
Inter-Regional Flow (IRF) / Parts Sold to FCA US LLC affiliates
Contractual agreements (by exception)
Current agreements remain in place and supersede this program
Specific Warranty Exemptions
Please reference LCC exemption file located on the Supplier Warranty Management website via eSupplierConnect

15. Major Exceptions to SAWRP
January 15, 2016
Major Exceptions to SAWRP
Mopar Warranty
Mopar accessories installed by Mopar Custom Shops, Assembly plants or the purchasing customer
M-Transactions (warranty claims) for service parts after the vehicle base, powertrain, or emissions warranty
Remanufactured parts
All major exceptions or removal from SAWRP will be referred to the Warranty Recovery Group to initiate the manual / case based recovery process.
These are the exceptions from the SAWRP performance measure. Note that these situations are NOT measured in the general SAWRP parameters.

16. SAWRP Appeals There a 2 types of appeals:
January 15, 2016
SAWRP Appeals
There a 2 types of appeals:
Spike Appeal – A spike appeal can be submitted when the current C/1000 is 0.5 C/1000 over the warranty target at any month of reporting (3MIS – 15MIS). This removes the SMLC/LCC from the SAWRP automatic billing and the Warranty Recovery Group will initiate a manual warranty recovery case.
This would be used to address financial billing only due to a warranty spike.
2. Target Appeal – A target appeal is a last resort option for the current model years warranty issues. These submissions are to address special warranty circumstances, and are submitted to either:
Decrease supplier’s C/1000
Increase the warranty target
Adjust Share Rate
Adjust Global External Balanced Scorecard
This would be used to adjust scoring
The three types of target appeals are listed on the next slide

17. SAWRP Target Appeals - Examples
January 15, 2016
SAWRP Target Appeals - Examples
Suppliers may appeal Targets to address special circumstances such as:
Warranty Information System constraints (warranty not being assigned correctly)
Appeal MUST be submitted prior to October 1st, 2018
Example: A WIS system constraint is when a supplier is receiving warranty claims for another SMLC. For example, 12345X and 12345Z supply radios, all warranty claims are being assigned to 12345X.
Examples of evidence: WIS Claims highlighting the part numbers belonging to another supplier
2. New technology with no warranty history
Appeal MUST be submitted prior to October 1st, 2018.
Example: Non-carry over parts with no warranty history
Examples of evidence: Engineering approval for new parts, Change notice number, etc.

18. SAWRP Target Appeals and Adjustments - Examples
January 15, 2016
SAWRP Target Appeals and Adjustments - Examples
Suppliers may appeal Targets to address special circumstances such as:
3. Appeals based on a failure of FCA US to react to a supplier’s recommended corrective action, or where the causal factor is clearly beyond the realm of the supplier’s control, will only be considered after escalation by Supplier Quality to the appropriate level within Engineering and Quality.
Appeal MUST be submitted prior to October 1st, 2018
Example: The supplier has recommended changes to FCA however, the changes will not be implemented; assembly plant induced failures or dealership over repair
Examples of evidence: Escalation to the SQE, Plant Quality and Engineering, GIMS issued to assembly plant for correction, Tech Authority repair instructions, detailed PDCA (from target appeal workbook)

19. SAWRP Target Appeals and Adjustments
January 15, 2016
SAWRP Target Appeals and Adjustments
This is an example of the on-line submission page for Target Appeals.

20. Target Appeals Appeal managed by cross-functional team
January 15, 2016
Target Appeals
Appeal managed by cross-functional team
Supplier Quality Engineers (as required)
Supplier Quality Warranty
Warranty Cost Recovery
FCA may establish or adjust targets under special circumstances.
Removal of a SMLC/LCC combination from SAWRP will result in the information being sent to the Warranty Recovery Group for manual, case based recovery processing.
Appeal cover sheet allows supplier to choose from categories, provide description of the appeal, propose new targets/ scores/ etc. Also has space for part numbers and internal records keeping.

21. Target Appeal Rules Target Appeal Rules
January 15, 2016
Target Appeal Rules
Target Appeal Rules
Appeals must be submitted by October 1, 2018
Limited to ONE successful appeal per SMLC/ LCC per model year
The Top 300 Report for Suppliers is not appealable
Target appeals are based on the Suppliers actions, evidence of actions taken in warranty reduction must be demonstrated in the appeal
Appeals are NOT a negotiation
Requested outcome or results of the appeal must be included
Supply what your company is requesting (Revised target/improvement factor, removal of part numbers from warranty measure)
FCA may develop an alternative outcome
Appeals submitted without a requested outcome will be rejected
Appeal cover sheet allows supplier to choose from categories, provide description of the appeal, propose new targets/ scores/ etc. Also has space for part numbers and internal records keeping.

22. Target Appeals Target Appeal Mandatory Requirements
January 15, 2016
Target Appeals
Target Appeal Mandatory Requirements
All appeals must be submitted online in SAWRP with the correlating worksheet from the workbook attached
Link to Target Appeal Workbook
The SMLC/LCC you are appealing must be included
The PDCA must be filled out entirely for consideration of any appeal
Change notice numbers, PER numbers and GIMS must be entered on the PDCA
Claim data must be from WIS (EWT and PRAS data is not appealable)
Supplier actions must be captured on the PDCA, if the PDCA is blank the appeal will be rejected
Evidence is, but not limited to, Change Notices, Dealership Instructions, Assembly Plant Instructions, Claim Data from WIS, s, Meeting Minutes, PER Trials, Statistical Data Proving Suggested Corrective Action will resolve the warranty issue, Test Data, Audit Data, etc.
Appeal cover sheet allows supplier to choose from categories, provide description of the appeal, propose new targets/ scores/ etc. Also has space for part numbers and internal records keeping. 20

23. January 15, 2016
Warranty Spike Appeal
FCA US or Supplier may appeal an individual SMLC/LCC combination
The “spike” threshold is based upon the suppliers warranty target. If the current C/1000 is 0.5 C/1000 over the warranty target at any month of reporting (3MIS – 15MIS) the Supplier is eligible for a “spike” appeal
A spike appeal must be submitted no later than January 22nd, 2019
Appeal is reviewed by SAWRP Administration
If accepted, SMLC/LCC removed from SAWRP and Warranty Recovery Group initiates a manual recovery case
FCA reserves the right to submit an appeal at any time 21

24. Warranty Spike Appeal January 15, 2016
This is an example of the on-line submission page for Spike Appeals.

25. Global External Balanced Scorecard (GEBSC) Target Methodology
January 15, 2016
Global External Balanced Scorecard (GEBSC) Target Methodology
GEBSC Warranty Target
Target is based on Local Commodity Code C/1000 average
Average the Local Commodity Code C/1000
Based on 16MY C/1000 Average compared to 17MY C/1000 Average
Target is lower of the C/1000 Average
Apply 15% Improvement Factor
Performance to the Local Commodity Code based Target will be used on the GEBSC for sourcing decisions
FCA reserves the right to adjust as required during the model year
More information regarding GEBSC Training is available in Supplier Warranty Management application in e-Supplier Connect.

26. GEBSC Scoring
Scoring: Warranty Score is based on Performance to Target (Actual / Target) * 100
Green: Supplier meets or exceeds target (Performance to Target < = 100%)
Score =80+ 𝑇𝑎𝑟𝑔𝑒𝑡−𝐴𝑐𝑡𝑢𝑎𝑙 𝑇𝑎𝑟𝑔𝑒𝑡 ∗21
Yellow: Performance to Target > 100% and < = 250%
Score = 80− Actual−𝑇𝑎𝑟𝑔𝑒𝑡 Ac𝑡𝑢𝑎𝑙 ∗33
Red: Performance to Target > 250% AND OVER Monthly Claim Threshold in Early Warranty Tracking (EWT) for 2018MY for the SMLC/LCC (Jan 1, 2017 through the end of the reporting month). Exception- If the EWT claim count is below the “Monthly Claim Threshold” then the GEBSC Score defaults to a Yellow score of 60%.
Monthly claim threshold is based on an accrued schedule below.
If your EWT claim count is greater than or equal to the “Monthly Claim Threshold” then use the “Red Status” chart (on the right) for the score. 26 26

27. Global External Balanced Scorecard Deductions- Warranty
January 15, 2016
Global External Balanced Scorecard Deductions- Warranty
Deductions:
Recall – Initiated by NHTSA, percent of supplier responsibility determined by Warranty Recovery Case.
Customer Satisfaction Notification (CSN) – Initiated by FCA, percent of supplier responsibility determined by Warranty Recovery Case.
Forever Requirement Violation (FRV) – Initiated by FCA for suppliers lack of response to Part Return Analysis requirements.
Rapid Response Transmittal (RRT) – Initiated by FCA to correct field concerns, at dealer locations, prior to the sale of the vehicle.
Additional information regarding GEBSC is found in the “Training” link in the “Supplier Warranty Management” website.

28. Directed Source Parts Definitions for Directed Source Parts:
January 15, 2016
Directed Source Parts
Definitions for Directed Source Parts:
Consignment:
FCA US picks up the parts from the sub-tier Supplier, delivers them to the end supplier and is responsible for the inventory. Warranty is assigned to the sub-tier Supplier (consignor), since there is a production purchase order.
Module Pay As Built:
FCA US has a purchase order with the sub-tier Supplier and associates the purchase order with the end item Supplier for releases and payments. The end item Supplier manages scheduling/logistics/inventory of sub-tier Supplier. Warranty is assigned to sub-tier Supplier since there is a production purchase order.
All other “informal” directed source parts:
When there is no production purchase order between FCA US and the sub-tier Supplier, Warranty is assigned to the end item Supplier since they have the production purchase order.
The Engineering Line-up Code determines if a part has a production purchase order or not. Line- up codes are displayed in source packages, CNs, and EBOM. Parts may have multiple line-up codes, depending on the vehicle and usage within a vehicle. Please contact the Supplier Quality Engineer (SQE) if there is a question about the part line-up code.
This slide was approved by Purchasing Operations with regard to wording on directed source parts. Only Consigned or MPAB parts will be assigned to the Tier 2 supplier. All other informally directed parts are the responsibility of the Tier 1 supplier to FCA.

29. SAWRP - Purchase Order General Terms & Conditions
January 15, 2016
SAWRP - Purchase Order General Terms & Conditions
The Supplier Associated Warranty Reduction Program was added to the
Purchase Order GT&Cs in 2010CY
8. GENERAL WARRANTY. (a) Seller warrants that the goods or services will (i) comply with all performance standards and product characteristics, including without limitation specifications, drawings, descriptions or samples, furnished and/or specified by FCA US, (ii) be merchantable, and (iii) be free from defects in material and workmanship. Seller further warrants that to the extent that Seller designs any goods, or FCA US relies on Seller’s expertise in any aspect of the design of the goods communicated by Seller to FCA US, those goods will be fit and sufficient for the purposes intended. The warranty term will be coterminous with the warranty extended to FCA US's customers by FCA US on the date of the Order, or any other date agreed upon by FCA US and Seller in the Order (except to the extent, prior to the commencement of initial volume production in connection with the applicable Request for Proposal, that FCA US and Seller agree that the goods must meet quality or durability requirements for a longer term, in which case the warranty term will be such longer term). (b) Seller’s liability for FCA US’s expense of reimbursing warranty claims made by FCA US’s dealers due to Seller’s breach of Clause 8(a) hereof or any warranties implied by law or otherwise made by Seller shall be determined in accordance with the Supplier Associated Warranty Reduction Program Policies and Procedures or any successor program or policies as published on the FCA US Supplier Portal (as referenced in Clause 1 hereof) on the date of the Order or on the date of any amendment to the Order. (c) Seller further warrants that FCA US will receive good title upon delivery of goods, services, Tooling, fixtures, or equipment under this Order, free and clear of all liens and encumbrances and that all goods, services, Tooling, fixtures, or equipment will be free from any actual or claimed patent, copyright or trademark infringement. (d) These warranties are in addition to any warranties implied by law or otherwise made by Seller and will survive acceptance and payment by FCA US.
SAWRP program is the Warranty Program identified in all parts General Terms and Conditions.

30. Supplier Expectations
January 15, 2016
Supplier Expectations
Familiarize your company with the Supplier Associated Warranty Reduction Program (SAWRP)
Utilize the Supplier Quality Warranty Playbook – available on eSupplierConnect
Implement a warranty compliant process (TS/IATF 16949) FCA US Customer Specific Requirement
Review available warranty data
Visit the Parts Return Center regularly, obtain returned parts for analysis and respond to requests from Quality Engineering Center (QEC) Warranty Specialists
Pursue resolution of “Trouble-Not-Found” issues (see CQI-14 NTF tool)
Facilitate Lessons Learned sharing internally and with FCA Group to eliminate recurrence of issues

31. Supplier Warranty Management – FCA US Support Tools
January 15, 2016
Supplier Warranty Management – FCA US Support Tools
This the front page to the Supplier Warranty Management application via e-Supplier Connect. The menu on the left is used to navigate the pages of information available to suppliers.
See this screen after logging into the e supplier connect. 34

32. FCA Group LLC Contacts
January 15, 2016
Questions regarding program administration and measurement
“Contact Us!” link on Supplier Warranty Management home page
Direct
Questions about commodity-specific issues
Customer Quality Assurance Team Specialist
Supplier Quality Engineer
Questions about SQ Playbook
Direct
Component Quality Analysis Team (CQAT)
Michael P. Moore (248)
Questions regarding billing:
Warranty Recovery Department
These are the important contacts for warranty management. 35

33. January 15, 2016
Summary
SAWRP Target
The SAWRP Target will be used to determine your Credit or Debit Share Rate
Based on the C/1000 performance of the SMLC/LCC
If a Supplier is identified on the Top 300 List
Determine the 2016 and 2017 Year End C/1000 for SMLC/LCC at 15MIS
Apply the 15% Improvement Factor for both years
Warranty Target for 2018MY will be the lesser of the past two model years warranty performance by SMLC/LCC
If no data exists then an average for the SMLC or LCC will be used
If a Supplier is not identified on the Top 300 List
Determine the 2017 Year End C/1000 for each SMLC/LCC at 15MIS
Apply the 15% Improvement Factor to calculate the 2018MY target for the SMLC/LCC
Based on the SMLC/LCC C/1000 performance to the SAWRP Target, and will be used to determine the Credit or Debit Share Rate
Questions? 36

34. Summary GEBSC Target and Scoring
January 15, 2016
Summary
GEBSC Target and Scoring
GEBSC Targets are based on Local Commodity Code C/1000 Averages
Performance to the Local Commodity Code based Target will be used on the GEBSC for sourcing decisions
GEBSC Targets
Target is based on Local Commodity Code C/1000 average
Average the Local Commodity Code C/1000
Based on 16MY C/1000 Average compared to 17MY C/1000 Average
Target is lower of the C/1000 Average
Apply 15% Improvement Factor
GEBSC Scoring
Scoring: Warranty Score is based on Performance to Target
Green: Supplier meets or exceeds target
Yellow: Performance to Target > than 100% and < = 250% OR < 120 Early Warranty Tracking (EWT) Total Claims for 2018 model year (Jan 1, 2017 through the end of month prior to reporting)
Red: Performance to Target > than 250% AND over 120 (EWT) Total Claims for model year (Jan 1, 2017 through end of month prior to reporting)
Monthly claim threshold is based on an accrued schedule
Questions? 36

35. January 15, 2016
Summary
SAWRP Appeals
Target Appeals must be submitted by October 1, 2018.
Target Appeals are based on the Suppliers actions, evidence of actions taken in warranty reduction must be demonstrated in the appeal.
Only 1 Target Appeal for an SMLC/LCC will be approved per Model Year.
Every Target Appeal must include WIS data.
Adjustments are made after approval and are not retroactive.
Spike Appeals must be submitted no later than January 22nd, 2019.
If the current C/1000 is 0.5 C/1000 over the warranty target at any month of reporting (3MIS – 15MIS) the Supplier is eligible for a “spike” appeal.
The Top 300 report is not appealable for Suppliers.
Questions? 36

36. January 15, 2016
Questions?
Questions? 36