CONTACTS 
0201 - S & C Ford                         415 553 4400 fax or 800...
020101 - Mr. Charles Mori; Controller

SUBJECTS
Millie's Mercury Sable, 940423
Wheel Alignment, Vibrations, Warranty
951008 Replace front tires

0605 -    ..
0606 - Summary/Objective
0607 -
060701 - Follow up ref SDS 8 0000, ref SDS 7 3456]
060702 -
060703 - S&C wants Welch to pay for S&C's mistake sending the car to the wrong
060704 - vendor. ref SDS 0 5852  Review shows the record does not support S&C's
060705 - solution. ref SDS 0 7546  To assist S&C in avoiding additional expense
060706 - and time on this matter, Welch accepted S&C's offer of $43.50 as its
060707 - best effort to support the customer. ref SDS 0 5722
060708 -
060709 - This record can help S&C improve communications and reduce tensions
060710 - among employees that harm morale and performance. ref SDS 0 9087
060711 -
060712 -     [On 951105 received payment on warranty claim. ref SDS 12 1792]
060713 -
060714 -     [On 951106 developd case study on S&C service. ref SDS 13]
060715 -
060716 -     [On 951106 submitted Com Metrics to S&C. ref SDS 14 0866]
060717 -
060718 -
060719 -  ..
0608 -
0609 -
0610 - Discussion
0611 -
061101 - S&C Installed Tires that Conflict with Warranty Contraray to Policy
061102 -
061103 - Charles has read the record for the work on 951009 shown at ref SDS 2,
061104 - which was submitted to S&C via ref DIP 2.
061105 -
061106 - He talked further with Barbara Stone.
061107 -
061108 - Charles related that Barbara remembers advising the customer that
061109 - Leo's was installing Hankook tires because they did not handle General
061110 - tires.
061111 -
061112 - This morning, Charles and I reviewed the the record showing S&C made
061113 - this disclosure after notice to proceed was given to install the
061114 - tires, since the initial discussion at 1319 (1:19p) only stated that
061115 - one tire was discovered to be defective and recommended that two tires
061116 - be replaced. ref SDS 2 9653
061117 -
061118 - At that point, Welch did not know there were General tires on the car
061119 - and that S&C was intending to install Hankook tires that conflicted
061120 - with the General tire warranty.  Welch relied on S&C to have followed
061121 - its policy to use appropriate vendors, as Charles pointed out in the
061122 - discussion on 951031. ref SDS 8 8530
061123 -
061124 -
061125 -  ..
061126 - Customer Relied on S&C to Comply with Warranty
061127 -
061128 - Welch reasonably relied on S&C to perform in compliance with tire
061129 - warranty provisions, since S&C is an expert in this field.
061130 -
061131 - S&C did not ask Welch for instructions on where to send the car for
061132 - tire repairs.
061133 -
061134 - S&C exercised its independent expertise and authority to perform the
061135 - work according to industry standards.  S&C contacted Welch after it
061136 - sent the car on its own judgement and action to a vendor, and, after
061137 - that vendor had performed work.  S&C did not ask Welch for ideas or
061138 - instructions on selecting a tire vendor.  S&C expected Welch to rely
061139 - on S&C's judgement in selecting an adequate vendor, in the same way
061140 - that S&C selects nuts and bolts, air filters, coolant, and hundreds of
061141 - other components which the customer leaves to the discretion of S&C to
061142 - properly manage.
061143 -
061144 - Welch learned by accident that the car had General tires, and that S&C
061145 - was installing Hankook tires, during a later call to Leo's Tire Shop
061146 - at 1415 (2:15p), after the work was performed. ref SDS 2 4561
061147 -
061148 - In three earlier discussions with S&C there was no disclosure that S&C
061149 - was performing contrary to the tire warranty provisions.  We called
061150 - Barbara at 1340 (1:40p) to ask that the tire be marked so warranty
061151 - action can be pursued.  We did not know what the warranty was.  We
061152 - assumed S&C had taken proper action.  At 1412 (2:12p) we called back
061153 - to ask about getting documentation of the warranty on the new tires.
061154 - Barbara suggested we call the tire vendor.  She told us who it was and
061155 - how to make contact. ref SDS 2 9674
061156 -
061157 - Perhaps Barbara did advise initially or at some point that Hankook
061158 - tires were being installed to replace General tires, as Charles cites
061159 - this morning from his discussion with Barbara. ref SDS 0 1674
061160 -
061161 - I have no independent recollection of such disclosure, but do not
061162 - dispute that it could have been made.  There was a lot going on at
061163 - this time which could have caused misunderstanding by everyone.
061164 - ..
061165 - The pace of communications makes it hard to recall accurately.
061166 - People forget, and remember things later that did not actually occur,
061167 - because the human mind commingles events with similar patterns.
061168 -
061169 - That is why businesses are searching for management practices and
061170 - tools to support traceability to original sources, for example ISO
061171 - 9000, reviewed on 951026. ref SDS 5 3384
061172 -
061173 - Good records avoid errors, but we can only reduce mistakes, not
061174 - eliminate them.  That is why we have warranties. That is why we rely
061175 - on experts, who offer quality service, to ensure we get the benefit of
061176 - warranties.
061177 -
061178 - Regardless of when disclosure was made, the customer did not have an
061179 - opportunity to learn that installing Hankook tires was contrary to
061180 - General's warranty until a week or so later on 951020. ref SDS 3 2146
061181 -
061182 - This is supported by Barbara's finding that S&C did not have a General
061183 - tire warranty on hand, and there was no copy in the glove compartment.
061184 - ref SDS 2 7640
061185 -
061186 -     [On 990603 S&C installing General Tires. ref SDS 16 1935]
061187 -
061188 -
061189 -  ..
061190 - S&C Determines Customer is Responsible for S&C's Mistakes
061191 -
061192 - Charles feels that under this record Welch was responsible to know the
061193 - the warranty terms, and that S&C had no duty to perform the work
061194 - according to industry practice to follow warranty provisions, contrary
061195 - to his explanation on 951031. ref SDS 8 8530
061196 -
061197 - Charles advised that even though S&C made a mistake sending the car to
061198 - the wrong vendor, the customer should have notified S&C not to install
061199 - Hankook tires after being advised by Leo's that it did not carry
061200 - General tires.
061201 -
061202 -     [On 990603 S&C installing tires comparable to Ford original
061203 -     equipment. ref SDS 16 1935]
061204 -
061205 - Charles said S&C did not err in sending the car to Leo's because that
061206 - was done expecting the problem was alignment, despite Larry Smith's
061207 - analysis on 951006 that performance symptoms were consistent with a
061208 - defective tire. ref SDS 1 6811  Barbara cited Larry's analysis as
061209 - justification for S&C's work on 951009. ref SDS 2 5681
061210 -
061211 - Charles indicated today, that the proper course was for Welch to
061212 - request that S&C notify Leo's Tire to remove the Hankook tires and
061213 - return the car to S&C, so that the customer could have pursued tire
061214 - replacement independently.  Charles said that Welch should have picked
061215 - up the car from S&C and taken it to a General tire vendor.
061216 -
061217 - It is unclear whether this would have meant driving with a defective
061218 - tire or installing a temporary spare.  This does not sound like a
061219 - professional solution to provide quality service, which S&C seeks to
061220 - provide.
061221 -
061222 - We did not review Charles explanation on 951031 that S&C made a
061223 - mistake in sending the car to a vendor that does not handle General
061224 - tires. ref SDS 8 3717
061225 - ..
061226 - Should the customer have expended the time to stop work, and go
061227 - fix S&C's mistake in its work?  Customer's hire vendors because they
061228 - do not have time nor the expertise to perform specialized work.
061229 -
061230 - On 951031 Charles identified saving time as an important management
061231 - goal. ref SDS 8 5225  He noted the importance of "expediting" the work
061232 - to save time, ref SDS 8 4550, and that it is frustrating to be forced
061233 - to stop current work and focus on other matters. ref SDS 8 0896
061234 -
061235 - The challenge is how to balance time management with good business
061236 - practice of inspecting the work.
061237 -
061238 - Customers expect the vendor to invest the time to do quality work, and
061239 - to stand by the work they do to make it right, whatever it takes. That
061240 - is the value added of a service provider.
061241 -
061242 -     [On 990603 S&C "bags" replacement parts to save customers time of
061243 -     inspecting during the work day. ref SDS 16 3504]
061244 - ..
061245 - The expense in lost time of asking the customer to fix S&C's
061246 - mistake would likely have exceeded $200, more than the cost of the
061247 - tires.  Bad feelings, not good will would have resulted for all
061248 - parties, if the customer had told S&C to stand down on the course of
061249 - action it was pursuing, and substituted the customer's judgement for
061250 - S&C's professional decision.  It is difficult to see, even in
061251 - hindsight, who would have benefited from the solution Charles puts
061252 - forward today.
061253 -
061254 -     [On 990603 S&C installing tires comparable to Ford original
061255 -     equipment. ref SDS 16 1935]
061256 -
061257 -
061258 -  ..
061259 - Subcontractors Complicate Work and Determining Responsibility
061260 -
061261 - A critical factor seems to be that S&C does not have a relationship
061262 - with a General tire vendor. ref SDS 2 5222  Another factor is that
061263 - while S&C performs tire inspections and rotates tires, Ford does not
061264 - warrant tires.  The customer expects S&C to manage the process
061265 - professionally, which necessarily means applying warranty provisions
061266 - correctly.  S&C has on file warranties for tires used on Ford cars in
061267 - order to do this, but did not have a General warranty. ref SDS 2 7640
061268 -
061269 -     [On 990507 S&C installing tires rather than subcontracting, which
061270 -     contributed to the problem today. ref SDS 15 0945]
061271 -
061272 -     [On 990603 S&C installing tires comparable to Ford original
061273 -     equipment. ref SDS 16 1935]
061274 -
061275 -
061276 -  ..
061277 - S&C Recognizes Warranty Disparities, Offers to Make "Customer Happy"
061278 -
061279 - Charles seemed to appreciate that the Hankook tire warranty is less
061280 - favorable than the General warranty, ref SDS 3 6453
061281 -
061282 - Charles indicated S&C has no ideas on how to reconcile the difference,
061283 - or whether it is important to do so.
061284 -
061285 -      [On 990507 S&C installed new tires and the warranty was an
061286 -      important factor. ref SDS 15 2090]
061287 -
061288 -      [On 990603 S&C Service Manager develops ideas to apply tire
061289 -      warranty. ref SDS 16 1935]
061290 -
061291 - Charles asked "What will make us happy?"
061292 -
061293 -
061294 -  ..
061295 - Customer Wants Benefit of Bargain, Good Faith Effort by Vendor
061296 - Payment of Customer Claims "Metric" to Improve Business Processes
061297 -
061298 - I said we want the benefit of our bargain, and to retain good working
061299 - relations with S&C.
061300 -
061301 - Objectives are set out in the letter to Bob, ref DIP 2 5412, issued on
061302 - 951023. ref SDS 4 4620
061303 -
061304 - The ultimate isssue is getting the job done as quickly and efficiently
061305 - as possible.  Who pays what to whom is a "business metric" that helps
061306 - people focus on improving work processes that benefit everyone, as
061307 - reviewed below. ref SDS 0 9087
061308 -
061309 - We don't have time to study all the warranties and chase down detailed
061310 - implementation.  We want to rely on S&C for that service.  Neither,
061311 - however, do we wish to harm a valued vendor.
061312 -
061313 - We know that other vendors have difficulties finding the best course
061314 - for every situation that occurs in a busy day.  It seems likely that
061315 - S&C is better positioned than us to know the best practice in
061316 - maintaining vehicles, including tire warranty matters.  Our aim is to
061317 - recover as much of an equitable settlement as possible, and to aid the
061318 - work process and communications so everyone can do a better job in the
061319 - future.  We invested time to analyse the record so that S&C can make
061320 - its own decision about what should be done to maintain customer
061321 - loyalty by providing timely, quality work.
061322 -
061323 - S&C has made a good faith effort on 951030, ref SDS 7 3456, and again
061324 - on 951031, ref SDS 8 8530, to understand what happened and to see our
061325 - point of view.
061326 -
061327 - As stated, in our letter on 951023 we accept S&C's offer as its best
061328 - effort in this case, ref DIP 2 5412, and request S&C's advice on what
061329 - we should do differently in the future to accomplish a better result
061330 - in concert with S&C.
061331 -
061332 -     [On 951106 reviewed the record for lessons learned. ref SDS 13]
061333 -
061334 -     [On 990715 S&C made good faith offer on another matter, and this
061335 -     was accepted. ref SDS 17 9764]
061336 -
061337 -
061338 -
061339 -
0614 -

SUBJECTS
Millie's Mercury Sable, 940423
Wheel Alignment, Vibrations, Warranty
951008 Replace front tires
Continual Learning
Don't Get Mad; Get Better
Success Requires Metrics to Discover and
Information Highway Causes Misktakes, Lack
Faster Better Cheaper Technology Makes

1411 -
141101 -  ..
141102 - S&C Scenerio Provides Opportunity to Improve Work Processes
141103 -
141104 - It is reported that President Kennedy's credo was "Don't get mad, get
141105 - even."  Thirty years later we believe a better solution is:
141106 -
141107 -                   "Don't get mad, get better."
141108 -
141109 -      ...there is enough madness in the world.  How can we get better,
141110 -      as discussed with S&C this morning? ref SDS 0 5722
141111 -
141112 -         [On 951106 submitted to S&C. ref SDS 14 0866]
141113 -
141114 -
141115 -  ..
141116 - Analysis - Faster, Better, Cheaper is Hard to Achieve
141117 -
141118 - The fundamental problem here was limited time. ref SDS 0 1674
141119 -
141120 - With more time, the tire warranty could have been reviewed.  The tires
141121 - could have been examined to determine the brand that needed service
141122 - before sending the car to a vendor that does not sell General tires.
141123 - An appropriate vendor could have been identified.  Work could then
141124 - have been performed consistent with the warranty without incurring
141125 - costly rework.  S&C's reliance on conversation rather than the record
141126 - is intended to give customers prompt service. ref SDS 8 3451. This is
141127 - consistent with industry trends where over and over we hear...
141128 -
141129 -
141130 -                    There isn't enough time
141131 -
141132 -
141133 -     ...to check the warranty, the invoice, the contract, the specs.
141134 -     The more information we get from faxes, meetings, documents, calls
141135 -     and dialog, the less chance there is to effectively use the part
141136 -     we need.  Doubtless if Barbara had taken time to do what was
141137 -     needed, a lot of people would have gotten mad, because it would
141138 -     have conflicted with the rule to "expedite," to go along, to be a
141139 -     "team player," reviewed above. ref SDS 0 3528  So Barbara acted
141140 -     correctly within the parameters of S&C policy to expedite, and
141141 -     industry practice to rely on conversation, noted by Charles on
141142 -     951031. ref SDS 8 3451
141143 -
141144 -
141145 -      ..
141146 -     Not Enough Time to Succeed?
141147 -     New World Order - Information Overload
141148 -
141149 -     Does this mean the job cannot be done correctly?
141150 -
141151 -     Is it really industry practice to mis-manage warranty provisions?
141152 -
141153 -     Is there really not enough time to succeed? ref SDS 10 5545
141154 -
141155 -     This question is asked more and more at Ford, IBM, Chevron,
141156 -     Bechtel, Harvard, Microsoft. Everywhere the "Information Highway"
141157 -     is crushing management under a glut of mistakes, fear, anger and
141158 -     frustrations.
141159 -
141160 -     People are hiring more accountants, lawyers and psychologists to
141161 -     clean up the mess, from review on 951031. ref SDS 10 8399
141162 -
141163 -
141164 - There is only one solution - add "intelligence" to management by
141165 - adding some "metrics" to communication.
141166 -
141167 - Since we cannot increase the amount of time, the only solution is to
141168 - increase the ability to capture and apply the record, so that we can
141169 - do more work correctly in the same 24 hour day.  This requires better
141170 - deployment of automation so we can work faster and more accurately at
141171 - less cost.  This requires Communication Metrics and POIMS technology.
141172 -
141173 - Right now the only way to apply these new tools is to use the Schedule
141174 - Diary System (SDS).  The idea is explained more fully in the paper
141175 - entitled "New World Order Needs Old Time Religion." ref OF 1
141176 -
141177 -     [On 951106 submitted to S&C. ref SDS 14 0866]
141178 -
141179 -
141180 -