Magna Global Quality Standard

MQS 13 – Warranty Management

1 Purpose
This Standard is to provide direction and support for all Magna groups, and their individual divisions (excluding
vehicle assembly operations) in the subject matter of Warranty Management. This includes the handling and
management of customer warranty, structured processing, analyzing, logistics and communication around
warranty. It covers the interaction between divisions/groups and the OEM, as well as sub tier suppliers in and out
of Magna.
This standard does not replace Customer Specific Requirements and documents where available.
The goal of this Standard is to provide guidelines in the following areas:

• Design for Warranty

• Customer Warranty Contract / Program
• Suppliers Warranty Contract
• Pro-Active Field Warranty Management
o Warranty data analysis
o Warranty return part analysis
• Customer Warranty Billing & Supplier Warranty Cost Recovery
• Lessons learned and design feedback.
• Management of Warranty Accruals
2 Scope
This standard is valid for all Magna manufacturing and assembly sites/groups (excluding vehicle assembly
operations) and shall be implemented locally at each site.

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

3 Responsibilities

Nr. Activity Responsible Role/Team Support

Ensure responsibilities and infrastructure are defined General Manager or

and resources allocated to support warranty designated functional
management, including backup personnel. area Manager

Quality/Warranty
4.1 Create a local procedure which covers the minimum Cross functional Team
requirements of MQS13

Engineering
4.2 Design for Warranty Quality/Warranty
Product Development

4.3 Customer Warranty Contract/Program Quality/Warranty/Sales Program Management

Sales

Purchasing/ Warranty/
4.4 Supplier Warranty Contract Sales Quality

Pro-Active Field Warranty Management - Product

4.5.1 Warranty data analysis Warranty / Quality Engineering/Process
Management Engineering/ Supplier
Quality Engineering

Pro-Active Field Warranty Management - Warranty

4.5.1.1 data analysis - Warranty / Warranty/Quality
Monitor current open issues Quality Management Management on Group or
Corporate Level

Product Engineering/
4.5.2 Pro-Active Field Warranty Management - Warranty Warranty / Quality Supplier Quality
return part analysis Management Engineering/ Process
Engineering/Program
Management/
Warranty/Quality
Management on Group or
Corporate Level

Customer Warranty Billing & Supplier Warranty Cost Warranty/Quality Warranty/Quality

4.6.1 Recovery - Customer Management Management on Group or
Corporate Level/ Senior
Leadership/ Sales/ Legal

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

Nr. Activity Responsible Role/Team Support

4.6.2 Customer Warranty Billing & Supplier Warranty Cost Warranty/Quality

Recovery - Supplier Warranty/Quality Management on Group or
Management Corporate Level
Purchasing Purchasing
Supplier Quality Engineering
Legal

Customer Warranty Billing & Supplier Warranty Cost Escalation to:

4.6.3 Recovery - Insurance Warranty / Legal
Quality Management Risk Management
Senior Leadership
Warranty/Quality
Management on Group or
Corporate Level

Lessons Learned and Design feedback - Conduct Warranty / Quality Supplier Quality
4.7.1 Lessons Learned and Read Across review based on Management/ Product Engineering
Product Design failures from warranty returns and Engineering Process Engineering
evaluation.

Lessons Learned and Design feedback - Identify systemic Supplier Quality Engineering
4.7.2
improvements and action plan to prevent reoccurrence. Warranty / Quality
Management
Product Engineering
Process Engineering

Management of Warranty Accruals Finance

4.8 Warranty/Quality
Management

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

4 Requirements

4.1 A documented local procedure shall exist which covers the minimum requirements of MQS13.

4.1.1 The local procedure shall define how the organization:

• Meets customer standards and promotes warranty protection and reduction for both
customer and company.
• Makes use of standardized and effective problem-solving methodology identifying
issues quickly and resolving them efficiently.
• Leads continuous improvement for both products and process through robust lessons
learned and read across in order to reduce the number of warranty complaints and
issues.
• Cultivates a warranty awareness culture within the entire organization.
• Actively manages Warranty by understanding of processes and claim management
including costs associated

4.1.2 Evidence of persons which are responsible for warranty management and persons/functions
listed in responsibility section being trained to procedure exists.

4.2 Design for Warranty

4.2.1 Design for warranty obligations regarding the product shall be identified and discussed.
Obligations may come from e.g.:
• Customer specification
• Experience with similar technologies
• Results of warranty parts analysis of previous projects.

4.3 Customer Warranty Contract/Program

4.3.1 Warranty related obligations in the customer warranty contract or program (incl. linked
documents) shall be identified and discussed.
4.3.2 It shall be verified, if a Framework contract or a special negotiated warranty contract or program
exists for Magna or your group.
4.3.3 Each customer warranty program shall be reviewed at contract review phase to understand
process and requirements (e.g. OWT-GM, BMW Warranty Agreement & GS95004, Daimler MBST
18 & MBN10448, Ford GWC, etc.).

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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MQS 13 – Warranty Management

4.3.4 Following Important landmarks shall be considered (based on the customer contract):
• Responsibility allocation (e.g. technical factor, share rate)
• Billing process (e.g. frequency, method)
• Requirements of warranty part analysis process (e.g. necessity of investments related to
testing or other)
• Run through times for warranty return part analysis (e.g. personnel planning)
• Reporting obligations to OEM

4.4 Supplier Warranty Contract

4.4.1 Define and discuss Warranty obligations for suppliers.

4.4.1.1 Review requirements concerning warranty management including part return process,
Warranty debit process, and expectations cascaded from Tier 1 or non- OEM customers
with the suppliers.
4.4.1.2 Verify “Directed Buy” suppliers impact to warranty cost and performance. Responsibility
defined by e.g. Rasic B, Bailed / Cosigned, Multi(Tri-)party Agreement, etc.
4.4.1.3 Obtain written agreement on “Supplier Warranty Contract” / Process / “General
Purchasing Terms and Conditions” / “Multi(Tri-)party Agreement” at the earliest
possible stage. (Exclusions: Bulk Material suppliers: i.e. Paint,metal,steel, fluids)

4.4.2 Wherever possible, a contractual situation shall be maintained, that allows warranty cost related
to the supplier to be recovered.

4.5 Pro-Active Field Warranty Management

4.5.1 Warranty data analysis

4.5.1.1 Apply for, and maintain, customer portal/B2B portal access where available, otherwise
request data from OEM.

4.5.1.2 Keep employees trained on analyzing provided data and functionalities.

4.5.1.3 Identify new emerging issues (internal/sub supplier).

4.5.1.4 Monitor warranty claim data provided by OEM (e.g Customer portal/B2B system(s) for
potential new emerging issues or clean point violations on a regular basis.

4.5.1.5 Review and report warranty claim performance at minimum once a month on trends to
customer target or if no target exists internal target (KPI Standard Warranty Reporting)

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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MQS 13 – Warranty Management

4.5.1.6 The following KPI’s are mandatory:

• Warranty Cost
• Customer (scorecard) / KPI target status (e.g.: Nissan/ Ford/ GM/ FCA/ BMW etc..)
where available. Where customer target is not provided, divisions/ group shall develop
an internal Target based on historical warranty data.

4.5.1.7 The following KPI’s and analysis tools are examples for best practice:

• R/1000/C/1000/IPTV/CPU/CPR etc., Repair per Thousand Vehicles Sold (or number of

shipped parts).
• 1 MIS/ 3MIS / 24MIS Field Warranty.
• Failure Mode Pareto.
• Layer line diagram/ warranty charts

4.5.1.8 These KPI’s shall be available for each individual customer and to be recorded and
retrievable. Best practice approach would be to maintain KPI’s per part family of each
individual customer, still within its warranty period.

4.5.1.9 Follow established customer or internal alarm limits.

4.5.1.10 Request necessary amount of failed parts for analyzing potential new emerging issues.

4.5.1.11 Monitor current open issues

• Review, update and report KPI on open or new emerging issues

• Prioritize issues (potential new emerging as well as known) based on severity, cost and
claim frequency or as mandated by management/customer.
• Escalate / report potential new emerging issues to management.
• Follow Customer Specific requirements when dealing with field actions. (e.g. VDA
Product Integrity/CQI 14).

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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MQS 13 – Warranty Management

4.5.2 Warranty return part analysis

4.5.2.1 Must satisfy the customer requirements as applicable (for example: IATF 16949, VDA
Field Failure Analysis, CQI-14, MBN10448, BMW GS 95004).
For a best practice Warranty Return Part Analysis Workflow see Appendix A below.
4.5.2.2 Customer align test matrix (if applicable).
4.5.2.3 Ensure availability of necessary test tools and equipment.
4.5.2.4 Ensure product and process knowledge of team member(s)
4.5.2.5 Ensure sample size of return parts is appropriate to provide analysis internally and for
sub suppliers.
4.5.2.6 Create record of part return (best practice is a part return log).
4.5.2.7 Identify VIN history for claims (where customer data exists).
4.5.2.8 Analyze part as required by customer specific requirements / agreements.
4.5.2.9 Ensure response time for parts analysis is tracked to avoid automatic acceptance of
liability (where applicable) i.e.: GM OWT /BMW Warranty agreements.
4.5.2.10 Communicate with internal/external customer as needed / as aligned with
management.
4.5.2.11 Perform monthly / quarterly warranty review meeting with the Customer as required.

4.6 Customer Warranty Billing & Supplier Warranty Cost Recovery

4.6.1 Customer
4.6.1.1 Avoid payment for false or excessive warranty charges.
4.6.1.2 Use results of warranty return part analysis to verify billing.
4.6.1.3 Review all claims data for validity and parameters in warranty period.
4.6.1.4 Dispute in a timely manner as per customer requirements to ensure no auto approved
charges. (ie: GM OWT auto approve).
4.6.1.5 Costs should be reviewed with your senior leadership monthly.

4.6.2 Supplier
4.6.2.1 Recover total (Magna + customer) incurred cost.
4.6.2.2 Important for recovery: Supplier agreement on “Supplier Warranty Contract” and/or
“General Purchasing Terms and Conditions” of Magna / your Group.
4.6.2.3 Best practice for “Directed Buy” suppliers, are Multi(Tri-)party agreements, where the
OEM supports direct billing to the sub supplier.

4.6.2.4 Inform or involve supplier in a timely manner as required / applicable.

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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MQS 13 – Warranty Management

4.6.3 Insurance
4.6.3.1 The organization shall be informed that Magna holds a liability insurance for large
events.
4.6.3.2 Identify and determine risk and actions as defined in Magna Warranty Guideline to be
found on Magnet.

4.7 Lessons Learned and Design feedback

4.7.1 Conduct lessons learned and read across review based on product design failures from warranty
returns and evaluation following the systematic Problem-Solving Approach to promote warranty
risk reduction on existing and new products.
4.7.1.1 Provide Warranty data of similar products (internal or external benchmark).
4.7.2 Identify systemic improvements and maintain an action plan to prevent reoccurrence.

4.8 Management of Warranty Accruals

4.8.1 Calculation of accruals can be based on e.g.:

• Failure rate in the field
• Warranty Period
• Average cost per case (labor &material)
• Warranty share %
• Product changes (part history)
• (Additional) Risk
4.8.2 Best practice is the use of statistical methods e.g. “Weibull analysis”. Verify results with previous
exposure.

4.8.3 Reporting of accruals to finance.

5 Records

Records shall be maintained according to local Magna manufacturing site procedures.

6 Required templates & document examples

Link to the templates/examples on MagNET:
_________LINK___________

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

7 Definitions

7.1 Accruals, amount assigned to cover the warranty cost risk

7.2 Emerging Division is an individual location that produces and/or supplies goods and services to a
customer.

7.3 Issues, new upcoming claims with signs of new failure modes, shifting trends and other indicators within
the warranty claim data and/or return parts analysis findings.

7.4 KPI, Key Performance Indicators and referred to as Key Measurement Indicators.

7.5 NTF, No trouble found, this means that the analysis after step 2 (see flowchart) has not revealed any
deviation against the specified function/dimension for the part in question. Note: If an issue is confirmed,
but deviates from the complaint by the customer, it is not an NTF.

7.6 Pro-active, means that we search for signs of new failure modes, shifting trends and other indicators
within the warranty claim data and/or return parts which we initiate enhanced testing of returned parts
on our own initiative prior to any request or escalation from our customer.

7.7 Read Across, proactively review and apply lessons learned to the related products and processes as
applicable.

7.8 VIN History, data to identify multiple claims of the same vehicle

7.9 Warranty Claim is defined as a claim that is brought by the customer after our products have been built
into a vehicle and is discovered during operation of said vehicle. Some variations exist between different
OEM’s and the different product groups within Magna and shall be described by each individual division
in their process.

7.10 Warranty Claim List / Data, this is the complete list of raw data claims that we can retrieve from a
customer portal, or were provided by the customer, the list contains all claims attributed to our supplier
number and does not consider who is responsible for the cause of the individual claims.

7.11 Warranty Cost, amount accrued for identified cost risk based upon past performance and projection from
available data. Including Negotiated warranty Factors.

7.12 Warranty Parts, these are the physical parts returned for analysis.

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

8 References

8.1 IATF 16949 – most current

8.2 VDA Field Failure Analysis

8.3 Magna Warranty Guideline

8.4 VDA Product Integrity

8.5 CQI 14

8.6 Customer Specific Programs (e.g. GM OWT, Ford GWC, FCA SAWRP, BMW Warranty Agreement, Daimler
MBST18).

9 Change History

Revision Revision Date Description of Change

01 27.11.2020 Initial Release

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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 Magna Global Quality Standard
MQS 13 – Warranty Management

10 Appendix A

Author Approved & Released Revision / Date

Philipp Posch & Mike da Silva - 27.11.2020 Lina Bucci; Wolfgang Geyer; Amalia Ma - 27.11.2020 01 / 27.11.2020

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