What are the IATF 16949 contingency plan requirements and why are they vital?

International Automotive Task Force (IATF) 16949:2016 which was published on October 3rd, 2016 replacing the ISO/TS 16949:2009 that helps to define the QMS (Quality Management System) specifically for the automotive sector. Contingency planning has been made a mandatory part of IATF 16949:2016 structure, which means one cannot have full compliance until you have your contingency plan designed and tested to meet unforeseen situations.

Section 6: IATF 16949 Contingency Plan

Section 6 of IATF 16949 revolves around planning and describes all the requirements of addressing risks and opportunities to analyze risks. Additionally, it covers the requirements for quality objectives, preventive actions, and plans to accomplish them.

Clause 6.1.2.1 Risk Analysis

  1. Last updates from Product recall (if any)
  2. Audits’ observation or nonconformities learning
  3. Customer complaints (if registered any)
  4.  Minimization of Waste
  5. Product rework or Product defects detected

What Are Contingencies and How They Can be planned?

The literal meaning of Contingency can be defined as a condition that is possible in the future, but it cannot be predicted. There are many ways to plan strategies related to contingencies, and organizations can perform the way they think it will be more effective.

The generic steps to plan a contingency plan are:

  1. Designing the contingency policy statement for planning
  2. Execute Business Impact Analysis (BIA)
  3. Seek Preventive Controls
  4. Identify contingency strategies
  5. Ensure testing and evaluation of contingency strategies

Answering Why for Contingency Planning

The motive behind contingency planning is to bring the organization to a normal phase as quickly as possible after facing disruption for whatsoever reasons.

Following are the advantages of contingency planning:

  1. Losses being Minimized

Any organization can be a victim of a natural disaster. Even worse, Power outrage! All these unpredicted conditions may lead to a decline in production cycles. Your contingency plan should include steps to bring the business back to production as soon as possible so that injuries can be minimized.

  1. Empowered Team

Once contingency plans being developed, it is essential to test the contingency plans’ effectiveness. Upon an unbeaten test run, your team will feel empowered and will feel less panic in case of any unforeseen circumstances.

  1. Building Trust among Clients

The more efficient and effective your contingency plan will, the more your clients prefer you over your competitors.

  1. New Business Opportunities

Since you will be able to win your customer’s satisfaction levels, your clients might refer you to more people, or maybe your success start speaking, and people tend to choose over any other choice existing in the same market place.

IATF 16949 Contingency Requirements

Clause 6.1.2.3 Contingency Plan is defined in the system as below:

The organization shall:

  • Identify and evaluate internal and external risks to all manufacturing processes and Infrastructure equipment essential to maintain production output and to ensure those customer requirements are met;
  • Define contingency plans according to risk and impact to the customer;
  • Prepare contingency plans for continuity of supply in the event of any of the following: critical equipment failures (also see Section 8.5.6.1.1); interruption from externally provided products, processes, and services; recurring natural disasters; fire; utility interruptions; cyber-attacks on information technology system, labor shortages; or infrastructure disruptions
  • Include as a supplement to the contingency plans, a notification process to the customer and other interested parties for the extent and duration of any situation impacting customer operations;
  • Periodically test the contingency plans for effectiveness (e.g., simulations, as appropriate);
  • Conduct contingency plan reviews (at a minimum annually) using a multidisciplinary team including top management, and update as required;
  • Document the contingency plans and retain documented information describing any revision, including the person(s) who authorized the change(s).

Detailed Explanation of IATF 16949 Section 6.1.2.3

Contingency plans should always be on your list if you are running an organization. One should always be ready for any disruption condition which might occur due to an intervention of external factors. IATF 16949 Section 6.1.2.3 outlines all the requirements while planning for contingencies for:

  1. Disruption conditions
  2. Products, services, equipment, and processes
  3. Natural disasters or labor shortages

To strengthen the IATF 16949 Contingency plan, one must test and review the effectiveness of contingency plans. Just for illustration purpose, consider a plant production facility having essential equipment necessary to keep up the production processes running.

For the sake of contingency plan designing, one must have a sufficient inventory of spare parts and relevant tools for that one heart of the production machine.

Establish a practice among maintenance staff to count and recount the spare parts inventory periodically so that production processes can remain unaffected at the time of break down or any disruption condition.

In case the testing of contingency plans fails, one needs to re-evaluate it with the team to fill up the gaps or loopholes in the IATF 16949 Contingency Plan strategy.

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