A household plastics company has become a supplier for a global automobile manufacturer, or a carpet weaving workshop has joined the international automobile supply chain. A new opportunity opens up for many Vietnamese businesses thanks to the Rules 6th edition of the International Automobile Task Force 16949 (IATF 16949).
Effective January 1, 2025, this set of standards redefines the industry, opening doors to many areas of the billion-dollar market. What are the specific opportunities and challenges? Nguyen Thai Nguyen, director of responsible business services (RBS) certification at SGS Vietnam, discussed this with The Saigon Times.
The Saigon Times: The ISO 9001 was issued in 1987, and the IATF 16949 for the automobile industry was established in 1999. What are the main common feature and difference between these two sets of standards?
Nguyen Thai Nguyen: The IATF 16949 was developed based on the ISO 9001. Therefore, both sets of standards are grounded in the quality management system ISO 9001. Both aim for continuous improvement, increased customer satisfaction, and ensuring products and services meet quality standards.
The main difference is that the ISO 9001 represents the set of common standards applicable across all industries and organizations, while the IATF 19649 pertains to the specific standards developed by the IATF for the automobile industry. Additionally, the IATF 16949 includes many strict and rigorous requirements to address the unique demands of customers in the automobile sector.
The latest version Rules 6 is effective from early 2025. What difficulties are big businesses in the automobile industry and supporting industries in Vietnam facing in compliance?
The first issue is the shortage of personnel with a deep understanding of the system and standards.
Many large businesses in Vietnam’s automobile and supporting industries often base their quality management systems and documents on their parent company’s system. However, significant differences usually exist in size, experience, and development resources between the parent company and its subsidiaries.
When there is a change or update to standards, such as the 6th version of the Rules, the parent company often takes time to perfect the documents and the new system. Then, it assigns representatives to Vietnam to deploy for its subsidiary. This process requires a significant amount of time and effort, particularly in adjusting documents to reflect the reality in Vietnam. This leaves personnel at the subsidiary perplexed about whether to apply the standard fully or to adapt it to their internal situation.
Consider an example. The parent company has 500 employees and a comprehensive system of departments, sections, and processes. Meanwhile, the subsidiary in Vietnam has only 50 employees. Applying the entire system of the parent company could cause overburdening and complicate operations. However, if the subsidiary makes omissions or adjustments on its own without clear guidance from the parent company, there is a risk of non-compliance.
The personnel failure to update changes leads to errors in the compliance process, which are only discovered during assessment. For example, when upgrading from Rules 5th to Rules 6th, the risk assessment tool FMEA 5 is one of the five core tools updated with more detailed, in-depth requirements, including clearer analysis of product specifications and functions, as well as the application of new approaches, structures, and forms.
If businesses have plans for assessment in early 2025, the time to start applying Rules 6th is now, but if they have not yet updated or conducted internal training, it may lead to improper procedures during the assessment process as well as non-compliance with standards.
Let’s not discuss the strengths and weaknesses of the automobile industry’s supply chains and supporting industries in Vietnam, but from a business perspective, what is the main bottleneck right now?
A specialized study shows that 21% of businesses lack resources, including manpower, which is the main bottleneck or pain point. Additionally, 14% of businesses are not certified for backup plans in case of emergencies. The rate of leadership’s commitment stands at 14%. Problem-solving ability and a lack of knowledge about the core tools of the standards account for 12% and 11%, respectively.
The IATF certificate is like “an entrance ticket” to the automotive industry. The biggest challenge is a failure which results from a lack of thorough knowledge about the process. Additionally, many large businesses in Vietnam must comply with emission reporting. Starting in 2026, the EU’s CBAM (Carbon Border Adjustment Mechanism) requires companies to have emission data; otherwise, their goods can be seized at ports or face high carbon taxes.
What do you think businesses should focus on when investing money, effort, and manpower to reach the ISO 9001 and the IATF 16949?
This issue is hard to discuss briefly because it covers a wide area. However, in my experience, attention should be paid to efficiency when allocating resources to meet these two standards. It must be right from the beginning. Businesses need to understand the requirements of the standards accurately, select the right partners for training and consulting if needed, and invest in their internal staff to develop and maintain the system.
Requirements about standards often come from auto firms, mainly focusing on risk management and safety for products. In essence, these requirements are very useful for businesses if they are correctly understood and applied. However, they may lead to waste and ineffective implementation of the new standard system because many businesses fail to properly grasp the importance or choose the wrong partners at the start.
Reported by Ho Nguyen Thao
