1. January 15, 2016
2018 Model Year
Supplier Associated Warranty Reduction Program (SAWRP) Policies and Procedures
Purchasing and Supplier Quality Operations and Integration - Warranty
April, 2018

2. 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 through availability and 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

3. Supplier Associated Warranty Reduction Program (SAWRP)
January 15, 2016
Supplier Associated Warranty Reduction Program (SAWRP)
The warranty targets remain fixed for all 12 months of reporting
The warranty target setting methodology uses claim data regardless of responsibility
The actual performance measured to the target is also regardless of responsibility
Supplier warranty performance is measured by components that are replaced and identified as the failed component on the claim
The warranty measure is based on the “So Equipped” divisor and does not include labor only warranty claims (i.e., where no part is replaced)
Performance target is based on prior Supplier Manufacturing Location Code (SMLC)/Local Commodity Code (LCC) C/1000 results
Determines Supplier Share Rate (Debit) or Supplier Credit Rate (CCM)

4. Model Year Process Timeline
January 15, 2016
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

5. 2018 Model Year Evaluation Period Details
Model Year based
January 2019, SMLC/LCC combinations will be evaluated to determine if targets have been met.
Measurement will be 3 Months In Service (MIS) Year to Date (YTD) C/1000 Total at 15MIS

6. 2018MY SAWRP Target-setting Methodology
January 15, 2016
2018MY SAWRP Target-setting Methodology
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)

7. Warranty Information System (WIS) Parameters
2018
2017
Select C/1000 after setting parameters

8. C/1000 Report Example LCC (99AZ) Current C/1000 1st Prior Comp
2nd Prior Comp
MY 2018

9. 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.

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

11. 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

12. 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

13. Major Exceptions to SAWRP (Continued)
January 15, 2016
Major Exceptions to SAWRP (Continued)
Mopar Warranty
Mopar accessories installed by Mopar Custom Shops, Assembly plants, Dealers, or the purchasing customer
M-Transactions (warranty claims) for service parts repaired 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.

14. 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

15. January 15, 2016
Target Appeals
Suppliers may appeal to address special circumstances such as:
Warranty Information System constraints (warranty not being assigned correctly)
Appeal MUST be submitted prior to October 1st, 2018
2. New technology with no warranty history
Appeal MUST be submitted prior to June 1st, 2018.
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
Missing 10 MIS review/appeal cutoff point.

16. Target Appeals Appeal managed by cross-functional team
January 15, 2016
Target Appeals
Appeal managed by cross-functional team
Supplier Quality (BICEEP) (as required)
Supplier Quality Warranty
Warranty Cost Recovery (as required)
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.

17. Target Appeal Rules Target Appeal Rules
January 15, 2016
Target Appeal Rules
Target Appeal Rules
Appeals for New Technology must be submitted by June 1, 2018
Appeals for WIS Constraints and FCA Failure to React must be submitted by October 1, 2018
Limited to ONE successful appeal per SMLC/ LCC per model year
The Top 300 Report and SQE Matrix are 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.

18. Target Appeal Mandatory Requirements
January 15, 2016
Target Appeal Mandatory Requirements
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.

19. January 15, 2016
Warranty Spike Appeal
FCA US or Supplier may appeal an individual SMLC/LCC combination
The “spike” threshold is based upon the Supplier’s SAWRP target. If the current C/1000 is 0.5 C/1000 over the 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

20. 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.

21. 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. 21

22. 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.

23. Directed Source Parts Definitions for Directed Source Parts:
January 15, 2016
Directed Source Parts
Definitions for Directed Source Parts:
Consignment:
Warranty FCA US has a purchase order with the sub-tier Supplier, 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).
Module Pay As Built:
Warranty FCA US has a purchase order with the sub-tier Supplier, creates “MPAB partners” on the PO with the end item Supplier for manufacturing, releases and payments. The end item Supplier manages scheduling/logistics/inventory of the sub-tier Supplier. Warranty is assigned to the sub-tier Supplier.
Other Directed source parts:
 Warranty is assigned to the end item Supplier.
This slide approved by Diana Hirn with regard to wording on directed source parts.

24. SAWRP - Purchase Order General Terms & Conditions
January 15, 2016
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.

25. 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 CQI-14 compliant process (TS/IATF 16949) FCA US Customer Specific Requirement, see for CQI-14 manual (Automotive Industry Action Group)
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

26. Additional Information
January 15, 2016
Additional Information
For questions regarding program administration and warranty measurement:
Contact the Purchasing and Supplier Quality Warranty Department by sending an directly to
For questions regarding billing:
Contact the Warranty Recovery Department by sending an directly to
Additional information regarding GEBSC and SAWRP are found in the “Training” link in the “Supplier Warranty Management” website.