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Reddigo L.L.C. Your Source for Reductions in Warranty Exposure

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Reddigo brings to its customers a seasoned team of professionals with experience in warranty parts analysis, quality, engineering, project management, law, education, and finance. Reddigo also brings extensive automotive experience within the assembly plant and vehicle launch environment, supplier, dealership, Six Sigma, including global marketing, sales, and logistics. Reddigo is an ISO 9001:2001 compliant company. Who We Are

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Cost effective Flexible Removes non-warranty related ‘noise’ Functions not as a replacement, but as a complimentary resource to the existing parts return process Proven process and experienced leaders Reddigo guarantees a 10% warranty reduction using its own disciplines Reddigo’s Advantages

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The Reddigo Prime Directive WARRANTY IS FAILURE! Influences or concerns that bear on warranty costs must be mitigated and resolved.

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'The cost to replace a defective item on the production line is fairly easy to estimate, but the cost of a defective item that goes out to the customer defies measure' -- W. E. Deming 'The cost to replace defective items that go out to GM, Ford, and Daimler-Chrysler customers, average about $10 billion dollars a year, all of which are either directly or indirectly, paid by the customer.' -- Reddigo

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The Challenge

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The Challenge Warranty Week magazine warranty claim estimates 2006: General Motors Corp. about $537 per vehicle. Ford Motor Co. about $541. DaimlerChrysler AG about $628. The weighted average is about $560 per vehicle across all brands and product lines. Japanese imports, meanwhile, will average only $226 per vehicle in warranty claims, with Toyota/Lexus at $233 and Honda/Acura at $216 per vehicle sold in the U.S. Deservedly, these automakers are perceived to be manufacturers of high-quality vehicles that experience relatively few warranty claims. But not everything they make is top-rated, and not everything made in Detroit is at the bottom of the rankings. What's surprising is how wide the gap is between actual and perceived quality…

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Warranty claim validation Warranty claim validation plus testing There are many metrics that can describe the state of warranty. There are few to none that describe the validity of warranty claims. Trust, but verify… What Reddigo Can Do For Your Company Now

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Typical OEM Warranty Parts Return Policy That the part must accompany the proper paper work That the part returned must match the part removed from the VIN that is indicated on the paper work That the part returned must not be damaged That the correct repair procedure and diagnostics were applied Warranty policies typically require:

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Dealer concerns – wrong, broken, or disassembled parts, and improper repairs Special cause concerns Design concerns Capture of the discovery targets are volume dependent. Discovery Targets

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Reddigo will validate each part, matching the part received to the repair order paperwork. A significant portion of all warranty return parts either do not match the repair order (RO) claim paperwork, are the wrong part returned, are damaged, or they are received with improper or no paperwork. Claim Validation

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Sundry reports, charts, and graphs, are not the same as having the part in your hands! At Reddigo The PART Drives the Process… Warranty parts ‘en route’ from the dealer or ‘unavailable’ for validation and inspection have no value, and represent a potential cost deficit. The ‘Driving’ Principle

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Reddigo will inspect each part and perform functionality testing as required. A significant portion of warranty cost is reflected in the number of Trouble Not Identified (TNI) parts i.e. parts that are returned that function to design intent. Parts Inspection and Testing

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Reddigo will coordinate with the appropriate warranty responsible activities to assure that dealer service procedures and diagnostics are properly documented. Parts returned that have high Trouble Not Identified (TNI) rates may indicate deficient service procedures or diagnostics, or the existence of a systemic influence that affects the performance of the part. Parts that function to design specification are not legitimate warranty replacement candidates. Dealer Service Procedures

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THE REDDIGO MODEL Emphasis: Claim Validation and Inspection REDDIGO Advantages Direct ship to REDDIGO within 5 business days Each warranty claim is validated and tested Supplier can have full access to parts for full evaluation Validated cores presorted before shipment to re-man core processing facility Re-man Facility Corporate Supplier REDDIGO Claim Validation (Test if Required) All contracted parts Contracted parts direct Shipped to REDDIGO Parts Return Models are Complimentary Re-man Cores Returned to Re-man Facility Corporate Warranty Parts Return Center Warranty Analysis and Info Clearing Warranty Parts Return Flow Other Re-man Cores Flow Parts Requests Dealer Payment Dealer Debits Warranty DB Validation-Test Results and Information Flow DEALER Parts and Info Expedited to Warranty Responsible Activity

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The warranty parts return process must be independent and separate from engineering, design, dealership, or supplier influence. A robust warranty parts return process is for the purpose of providing unbiased, unfiltered, parts information as quickly as possible. Third Party

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That because warranty costs originate at all dealers, then all dealers ought to participate in the warranty return process. It is important to determine the source and degree of all non-warranty ‘noise’. The typical dealer burden is the shipment of less than 20 parts per month per dealer to the parts return location. For Optimum Results…

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The number of claim validations and inspections required to optimize the warranty reduction ‘halo effect’ varies with each part and must be identified; this number is essential to a cost effective process. An optimum halo effect can yield a warranty reduction of more than ten times the value of the number of parts inspected and tested that are determined invalid. The Halo Effect

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When the desired warranty reduction target is reached, the ‘residual halo’ can then be maintained at a much lower and cost effective inspection sample volume. The Residual Halo

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Invalid Core Returns… Proper claim validation assures that the core returned from the dealer matches the claim before a core reimbursement is issued. Warranty Claim Validation

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Wrong parts returned Damaged parts returned Improper or no warranty claim paper work Studies show that warranty parts returned from the dealers that lack the proper claim paperwork, are damaged, or are the wrong part returned, can exceed 25%. Warranty Claim Validation

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Institutionalized Warranty Costs… Intensified claim validation and inspection programs can yield andgt; 50% warranty reductions, and induce an enduring residual warranty cost reduction ‘halo’ exceeding 20%. Warranty Claim Validation

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Keep the process simple. If the process seems difficult, then you are doing some other process that is not cost effective. …‘Find and fix’ is least cost effective! Reddigo’s Rule-of-Thumb:

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Domestic auto manufacturers will pay about 10 billion dollars in warranty costs in 2006. 1 billion $1.00 bills stacked flat would reach 78.914 miles into the sky! Reddigo would like to assist your Company recover warranty costs, beginning with the first .914 miles… Perspective

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Reddigo can coordinate supplier sponsored regional ‘How To’ dealer technician training seminars. Reddigo can track repairs using 30-60-90 day intervals to assure that diagnostics and repairs were performed correctly. Reddigo can place experienced master automotive technicians into high volume dealerships to observe and assist on new model vehicle repairs, and to report immediately on significant new concerns. Reddigo can assist as a third party, to guide, and provide administrative, and technical assistance to cross functional engineering teams. Reddigo can arrange with the OEM and supplier to perform more detailed inspections and testing of the warranty return parts, including the review of dealer service procedures. The Brain Storm Factory* a Reddigo subsidiary will provide third party management of employee suggestions, awards, and recognition. * Pending Other Reddigo Services

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The Warranty Cost Mountain is Daunting But Always Remember! You eat the elephant one bite at a time!

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End of Presentation Thank You!… Click Here to Contact REDDIGO

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