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Materials Management Operations Guideline/Logistics Evaluation January 2008 MMOG/LE Agenda Why MMOG/LE? What is MMOG/LE? Completing the Self-Assessment Who is Requiring MMOG/LE? MMOG/LE Key Criteria AIAG/Odette MMOG/LE Benefits Survey Customer Success Stories

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Agenda l.jpg
Agenda Evaluation

Why MMOG/LE?

What is MMOG/LE?

Completing the Self-Assessment

Who is Requiring MMOG/LE?

MMOG/LE Key Criteria

AIAG/Odette MMOG/LE Benefits Survey

Customer Success Stories

Supporting Training and Documents Available


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Why MMOG/LE? Evaluation


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Improving Supply Chain Delivery Performance Evaluation

Gain control of processes

Reduce inventory carryingcosts, premium freight, rework, line stoppages, lead times

Gain control of supply chain

Increase inventory visibility

Reduce supply chain risk

Support continuous improvement

Increase customer satisfaction

Increase competitiveness

Actionline Magazine, Fall 2006


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Who is Implementing MMOG/LE? Evaluation

Suppliers to comply with OEM requirements

Suppliers in emerging markets

Companies looking to

Reduce supply chain risks

Improve supply chain compliance and

Increase delivery and long distance performance

Regional industry associations

Brazil, Romania, China, etc.


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MMOG/LE Outside the Automotive Industry Evaluation

Universities

High Schools

Other non-automotive industries

Hospitals

Construction

Aerospace

Chemistry

Electronics

Industrial

Retail


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What is MMOG/LE? Evaluation


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Principles of Global MMOG/LE Evaluation

Recommended standard for materials and logistics

Self-assessment tool for identifying gaps in processes

Based on agreed business processes

By OEMs and suppliers

Ford, Chrysler, PSA, Renault, Volvo Car, Volvo Truck, etc.

Based on extensive, best practices

6 chapters

206 criteria

Determine current level of plant performance



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MMOG/LE Self Evaluation Categories Evaluation

Strategy and Improvement

Work Organization

Production and Capacity Planning

Customer Interface

Production and Product Control

Supplier Interface


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MMOG/LE Translations Evaluation

Available in 10 languages including:

English French German

Spanish Portuguese Chinese

Romanian Czech Russian

Turkish


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What Does this Mean to Me? Evaluation

Attend AIAG/Odette MMOG/LE standard training

Understanding and building a team to complete assessment

Complete self-assessment

Attend self-assessment education and review

Develop gap analysis and action plan customer, internal, and sub suppliers

Implement Action Plan

Internal processes and systems

Sub suppliers (e.g, Tier 2)

Customer certifies self-assessment score


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Completing the Evaluation Self-Assessment


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Download the Self Assessment Evaluation

odette.org or aiag.org

ENGLISH

FRENCH

CHINESE


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Complete the Form Evaluation Each Question is Yes (“X”) or No (Blank)

Populates the gap analysis tab




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Submit Gap Analysis Evaluation List of All Unanswered Questions (Blank)



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OEM Focus During MMOG/LE Audits Evaluation

Strategy and Improvement

Management commitment

Capacity and Production Planning

Supplier Interface (Tier 2)

Performance measurement

Sub-tier supplier communication

Sub-tier suppliers in emerging markets

Improvement Plan

Self-Assessment Quality



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MMOG/LE Processes Evaluation


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Key Criteria Evaluation

Materials Management Objectives

Analyzed, measured (action plans if necessary)

Defined, documented, communicated and understood

Identify continuous improvement opportunities

Corrective action for bottleneck processes

Job descriptions, work instructions and training plans


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Key Criteria Evaluation

Key Performance Metrics

Delivery Performance

Supplier Performance

Internal performance (plan versus actual)


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KPI’s for MMOG/LE* Evaluation

KPI4GMML 5

Production Disruption

Schedule Modifications

Incomplete units

Line Stops

KPI4GMML 6

Supplier Communication & Cooperation

Criteria : Self-sufficiency, Reliability, Responsiveness Supplier problem notification, Availability, Flexibility

KPI4GMML 4

Material Handling & Identification

or

Delivery Requirements

ASN Message

Customer Plant

DOCK

DOCK

Warehouse

Supplier

Plant

Assembly Line

or

KPI4GMML 2

Delivery Accuracy

KPI4GMML 3

“VMI”

KPI4GMML 1

ASN Performance

*Key Performance Indicators for Global Materials Management and Logistics


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Key Criteria Evaluation

Resource Planning

Flexibility and availability are optimized

Contingency plans and emergency procedures exist

Employees are trained

Capacity Planning

Long, medium, short-term plans reviewed regularly

Process in place to notify of shortages

Support all requirements for all customers

Minimize inventory

Obsolescence

Raw material

WIP

Finished goods


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Key Criteria Evaluation

Communication

Scheduling automatically integrated into system without manual intervention

830/DELFOR/Planning Releases

862/DELJIT/Shipping Releases

System compares resources versus requirements

Process in place to notify of resource limitations

Material Identification

Segregate good/bad material

Packaging and bar code labeling


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Key Criteria Evaluation

Production and Product Control

Process to monitor inventory levels

Safety stock, minimum stock, etc.

Count Accuracy

Product structure accuracy

Control and handling of WIP, scrap, rejects, returns

Traceability


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Key Criteria Evaluation

  • Engineering Change Control

    • Participate and formal sign off

    • New parts/past models/inactive parts

  • Shipping

    • Timing, contents and accuracy of shipping labels

    • Labels match customer requirements

    • Data content of ASN is 100% accurate

    • Controls in place to prevent shipping discrepancies

    • Customs clearing process (if applicable)


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Key Criteria Evaluation

  • Supplier Communication

    • Process to ensure sub-tier suppliers can support production on-time with the right quantities

    • Electronic communication (EDI or Internet)

      • Releases, schedules and ASNs

      • Planning horizon is appropriate

      • In-transit visibility from ASNs

    • Customs clearing process (if applicable)

    • Process for suppliers to notify of shortages


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Key Criteria Evaluation

  • Supplier Packaging

    • Bar code labels

    • Process to define packaging and pack size

    • Ensure sufficient packaging material is available


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Key Criteria Evaluation

  • Supplier Assessment

    • Methodology to select and evaluate suppliers

    • Continuous improvement process for sub-suppliers

    • Supplier performance metrics



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AIAG and Odette MMOG/LE Survey Evaluation

Survey administered in March/April 2007

Over 160+ survey respondents

North America

Europe

China

Respondent demographics

Tier 1, Tier 2, Tier 3 and Aftermarket

Large, Midsize and Small Companies

Implementation time was from 1 to 3+ years

Management commitment was not measured


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Top Five Performance Improvements: Evaluation Tier 1 and Tier 2-3

Ability to meet ISO TS-16949

Ability to keep existing business

Data accuracy

Ability to support lean (Tier 1)

Overall supplier rating (Tier 2-3)

Inventory Control

Regardless of Tier:


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Top Five Performance Improvements: Evaluation Large, Midsize and Small Companies

Data accuracy

Ability to meet ISO TS-16949

Ability to keep existing business

Large suppliers also indicated

Delivery accuracy and inventory control

Midsize suppliers also indicated

Supports lean implementation and new business

Small suppliers also indicated

Overall supplier rating and new business

Regardless of Size:


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Top Five Performance Improvements: Evaluation by Time Implemented

Data accuracy

Ability to meet ISO TS-16949

Ability to keep existing business

Also indicated:

< 1year: Ability to support lean and inventory control

1-2 years: Inventory control

2-3 years: Delivery accuracy and line shortages

3+ years: Reduced manual entry and inventory control

Regardless of Time Implemented:


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Data Accuracy Evaluation Positive Performance Improvement Mean Score Over Time

70

68

66

64

62

60

58

<1 Year

1-2 Years

2-3 Years

3+ Years

  • Notes:

  • On a 100 point scale

  • Over 60 is considered a strong positive response


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General Findings Evaluation

Meeting customer requirements and data accuracy are consistent benefits regardless of time, size or tier

MMOG/LE usage continues to improve year after year

MMOG/LE is an investment in first year of implementation

Continuous improvement is a journey, not a destination

Minimal differences between N.A. and Europe

Performance improvements were consistent


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MMOG/LE Results Identified Evaluation by OEMS


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Renault and MMOG/LE Evaluation Global Benefits

Renault requires the use of Global MMOG/LE in project phase (vehicles or engines)

In July 2007 for the “Twingo” program:

For 28 suppliers using Global MMOG/LE

Service Rate = 91 %

For the others :

Service Rate = 80 %


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Ford and MMOG/LE Evaluation Delivery Rating Improvements

  • 1641 suppliers in North America completed MMOG/LE

  • As of December 31st, 2007:

    • 90% of suppliers reporting MMOG/LE Level “A”

    • 90% of suppliers have a delivery rating > 80

    • 15% delivery improvement in the past 10 years


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Ford and MMOG/LE Evaluation Benefits

  • Improved Ford Delivery Ratings

    • ASN data accurate and timely

    • Up-to-schedule shipments

    • Correct packaging and labeling

    • Premium instances reduced

  • Improved communication with the Ford customer locations

  • Fewer Ford plant shut downs due to materials management issues

    All of which lead to increased customer satisfaction!


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Ford and MMOG/LE Evaluation Benefits

Feedback and observations from supplier onsite audits

  • Cost reductions; specifically inventory carrying cost of raw material, WIP, and finished goods

  • Optimization of inventory safety stock levels

  • Improvement in floor space utilization

  • Adherence to FIFO practices

  • Accurate labeling of material

  • Efficiencies in shipping and receiving areas with established window times

  • Accurate part tracking

  • Correct shipment being loaded on the truck

  • Better understanding of material management system

  • Visual organization – Plan For Every Part


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Ford and MMOG/LE Evaluation China Tier 1 Supplier’s Opinions

  • Reduction in raw material, work-in-process and finished inventory

  • More efficient process from receiving raw material to shipping inventory

  • Visible signs on shop floor identifying manufacturing operations

  • Use of metrics to capture failure in process

  • Importance of appropriate packaging

  • More organized warehouse: FIFO process used more effectively

  • More control and accountability in the material ordering process

  • More warehouse space

  • Ease of production planning and scheduling process

  • Ability to compare material received versus material shipped

  • Ability to see ASN’s from tier 1’s and pay tier 1’s electronically

  • Improved communications within the supply chain

  • Less errors in delivery rating


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Chrysler and MMOG/LE Evaluation Delivery Score Improvements

  • 600+ suppliers completed MMOG/LE in 2006/2007

  • 54% improved in Chrysler delivery rating

  • Average improvement in Chrysler rating = 30%

  • 36% improved MMOG/LE score

  • 85% are at “A” Level


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For Chrysler Evaluation

Improved Delivery Ratings in multiple categories:

Shipment data is improved

Maintained deliveries to schedule

Reduction in expedited freight

Improved plant up-time

Improved communication with plants

Provides measurable, objective data for supplier improvement

For Suppliers

Supports LEAN principles

Reduction in material, inventory, safety stock

Improved communications with customers

Reduced downtime incidents

Improved quality and efficiency of window time conformance

Provides measurable, objective data for supplier improvement

Chrysler and MMOG/LEMMOG Benefits


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Volvo Group and MMOG/LE Evaluation Benefits

All new suppliers are requested to submit the document

A Requirement for existing major and poor performing suppliers

A Criteria of Volvo Group Key Elements Procedures, Logistics

> 850 assessments received, > 230 verified with Volvo internal personnel (most often on location)

Linked to supplier relationship development process

Example N-America: Self-assessed 44% of suppliers on A-level

After verification 37% of suppliers on A-level

Example S-America: Adherence to supply instructions (Mar to Aug)

Total local suppliers average 89.0% correct day/quantity

Total self-assessed suppliers 86.7%

All verified level A-suppliers 96.7%

All verified level C-suppliers 85.8%

not included: Volvo Car Corporation


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MMOG/LE Benefits and Evaluation Success Stories from Suppliers


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JCC Evaluation

  • Company size $50 million USD

    • Supplier in Fuzhou, China

  • Parts produced

    • Aluminum alloy pistons

    • Motor air compressors

    • Diesel engines

    • Outboard engines

  • OEM and aftermarket supplier


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JCC and MMOG/LE Evaluation Benefits

  • Reduced raw material and finished goods inventory by 50%

  • Ability to achieve 100 points for monthly delivery rating

  • Decreased premium freight

  • Improved overall rating by 20%

  • Obtained a competitive advantage

  • Obtained new customers

  • Enterprise visibility into customer requirements drives business

  • Gained efficiencies in productivity, quality and delivery


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GATES – London Operations Evaluation

  • Products manufactured include pulleys, dampers and idlers.

  • Approx $55 million in sales (medium size)

  • Supplies to both OEMs and major Tier 1’s

    • Ford, General Motors, Nissan, Automotive Component Holdings (Visteon)


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GATES and MMOG/LE Evaluation Benefits

CUSTOMER DELIVERY PERFORMANCE

  • On time shipping performance to customers in 2007 was 99%

  • Delivery ratings to customers providing feedback is 100

    SUPPLIER PERFORMANCE

  • On time delivery from suppliers is 100% on date required

  • 97% of material requirements are communicated electronically to suppliers

  • 95% of incoming material shipments are transmitted via ASNs


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GATES and MMOG/LE Evaluation Benefits

PHYSICAL INVENTORY

  • As accuracy improved went 12 to 1 a year

    • Estimated cost for a physical inventory is $15-20K (overtime wages, equipment rental, inventory tags, etc.)

      INVENTORY VALUE

  • Reduction of approx. 50% since 2001

    • Since 2001 sales have increased by 20%

      EXPEDITED SHIPMENTS

  • Premium freight on inbound/outbound material has gone from $180K in 2002 less than $25k last year



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Harmonized Global Training Evaluation

1-Day standardized global AIAG/Odette training

Training Slides &Instructor Manual

ParticipantManual

Odette/AIAG

MMOG/LE

Work Group

ImplementationToolkit


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MMOG/LE Course Objectives Evaluation

Continuous Improvement Tool

What is the MMOG/LE?

Assessment

Gap Analysis

Implementation

MMOG/LE


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MMOG/LE Training and Seminars World Wide Evaluation

America’s

Europe

Others

55 people

23 people

177 people

United Kingdom

Czech Republic

China

United States of America

700 people

180 people

6 people

4 people

*

Sweden

Slovac Republic

Iran

Canada

130 people

50 people

15 people

Germany

Romania

Turkey

200 people

  • India (2008)

  • Additional Seminars held:

    • Japan

    • Taiwan

    • Hong Kong

    • Thailand

Mexico

640 people

25 people

France

Poland

100 people

160 people

13 people

Brazil

Spain

Russian Federation


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Related Guidelines and Best Practices Evaluation

M-7: Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE)

M-8: Key Performance Indicators for Global Materials Management and Logistics (KPI4GMML)

Trading Partner Agreement for Global Materials Management and Logistics (available March 2008)

E-17: Joint Automotive Industry Forum China B2B Recommendation

EDI/XML Project Planner

Global Evaluation for Carriers and Logistics Service Providers

Available at www.aiag.org or www.odette.org


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MMOG/LE Seminars held Globally Evaluation

Americas

US – Mexico – Brazil

Asia

Japan – Taiwan – China - Hong Kong – Thailand – India

Central and Eastern Europe

Poland - Czech Republic – Slovakia – Turkey – Russia – Romania

Europe

France – UK - Spain


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Example of Bulleted List Evaluation

  • Automotive Industry Action Group

    • Not-for-profit Association

      • Not against it, either

  • Everyone wins

    • Money

      • Money

      • More Money


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