Unapproved Plating Sub-Tier Change, Warranty Claims, and a Threat to Deprioritize Orders

Separate the people from the problem, then prepare on four fronts:

Interests, not positions. Yours: supply continuity, recovery of verified costs, accountability, and prevention of recurrence. Theirs: avoiding a large cash hit, protecting reputation, and keeping the business. Both need a workable ongoing relationship.

BATNA. Your alternative to agreement is weak: no qualified alternate for 22 weeks, and a public dispute could trigger the deprioritization threat. Improve it before negotiating: expedite alternate qualification, identify brokers or bridge inventory, and quantify how long you can tolerate the current supplier. A stronger BATNA changes the tone more than any argument.

Objective criteria. Use the contract's change-notification clause, the drawing and performance specification, the 37 claims, the containment invoices, and the return data. Test the 'equivalent' claim: equivalence requires validation data, not assertion; ask for salt-spray results, lot traceability, and comparison of the old and new plating.

Framing. Raise the deprioritization threat once, factually, and ask for a written supply assurance instead of reacting to it. Propose a package: joint 8D, supplier-funded containment with shared sorting where practical, credit or cost-sharing for verified claims, and future business contingent on performance. Do not open with a demand for the full $164,000.

Require a formal 8D with evidence, not a letter:

• Containment: identify all lots made with the new plating, quarantine at your site and in the field as appropriate, and define the inspection method for corrosion risk.
• Root cause: why the sub-tier change was made, why change control was bypassed, and why the performance test did not detect the difference. Include the sub-tier's process controls.
• Corrective action: approve or reject the new plating through a formal change process; if rejected, revert and requalify; if accepted, update the drawing to specify the plating specification and add validation testing.
• Sub-tier control: map critical sub-tiers, require notification and approval before change, and add the supplier's sub-tier change control to audit scope.
• Contract and system: strengthen change-notification language, add right-to-audit sub-tiers, and require lot traceability through the plating process.
• Verification: enhanced testing and containment for an agreed period (for example, 90 days or three production lots), then effectiveness review with data.

Make closure contingent on evidence and a follow-up audit, not on the supplier's assurance.

Internally, give the CEO a one-page decision brief: facts (2.1% field returns, 37 claims, $164,000 containment, 2,400 units on hold), exposure (revenue, warranty, regulatory if applicable), options (negotiated recovery, legal escalation, alternate acceleration), recommendation, and risks. Be explicit that full recovery may not be achievable and that supply continuity is the first priority. Do not promise a recovery figure before verification.

To the customer, communicate proactively and factually: what happened, which lots are affected, what containment is in place, and when the next update will come. Avoid blaming the supplier in customer communications; describe the issue and the actions. If the customer requires notification of sub-tier changes, confirm whether this one should have been reported and correct the record.

Coordinate messages: one spokesperson, a shared fact base, and no side commitments. Document all agreements with the supplier in writing, including supply assurance and corrective-action dates. Keep the negotiation and the customer communication on separate tracks so a commercial threat does not leak into the customer relationship.