Materials Management Operations Guideline/Logistics Evaluation

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Materials Management Operations
Guideline/Logistics Evaluation
MMOG/LE

• November 2007

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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
• Supporting Training and Documents Available

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Why MMOG/LE?
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Improving Supply Chain Delivery Performance

• 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?

• 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

• Universities
• High Schools
• Other non-automotive industries
• Hospitals
• Construction
• Aerospace
• Chemistry
• Electronics
• Industrial
• Retail

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What is MMOG/LE?
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Principles of Global MMOG/LE

• 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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Scoring Summary (ABC Classification)
A Level Supplier is considered to be at or near world class standards (90 or higher).
B Level Supplier is deficient in two or more aspects of a given category or multiple categories (75 lt 90). An action plan should be put in place and the corrective action should not require a significant amount of time to implement.
C Level Supplier is deficient in one or more critical or high impact aspects (75 or less). Action plans required to ensure deficiencies do not result in serious or prolonged issues to the customer.
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MMOG/LE Self Evaluation Categories

• Strategy and Improvement
• Work Organization
• Production and Capacity Planning
• Customer Interface
• Production and Product Control
• Supplier Interface

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MMOG/LE Translations

• Available in 10 languages including
• English French German
• Spanish Portuguese Chinese
• Romanian Czech Russian
• Over 2000 trained users in 16 different countries

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What Does this Mean to Me?

• 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 Self-Assessment
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Download the Self Assessment
odette.org or aiag.org
ENGLISH
FRENCH
CHINESE
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Complete the FormEach Question is Yes (X) or
No (Blank)
1.2 Objectives
1.2.1 Objectives relative to the Materials Planning and Logistics function are defined, communicated and understood within the organization.
Why? Objectives allow departments and employees to focus on areas of importance to achieve customer satisfaction and the organization's Materials Planning and Logistics strategy.
Criteria
F2 X All objectives are measurable and consistent with the organization's Materials Planning and Logistics strategy. EQOS - Inventory accuracy is measured by the cycle count program, supplier delivery performance, customer delivery performance.
 
F2 x Objectives are accepted by all relevant functions and are clearly cascaded throughout the organization. EQOS reviewed by operations and at staff meetings and posted monthly for all employees to review.
 
F2 Objectives are reviewed with senior management at planned intervals.
Populates the gap analysis tab
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Each Question is Weighted
F1
F2 Missing six results in C level
F3 Missing one results in C level
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Submit Scoring Summary
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Submit Gap Analysis List of All Unanswered
Questions (Blank)
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Who is requiring MMOG/LE?
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OEM EMEA North America South America Asia/ Pacific Frequency of Submission MMOG/ LE v2 Usage Comments
Europe Yes TBD Yes Annually Next submittal
Yes Yes By Jan. 2008 Yes Annually. This is a requirement for Q1. Next submittal Currently, all regions using MMOG/LE for Q1 require Level A except Europe and Asia Pacific, which currently accepts Level B.
Western Europe and Central and Eastern Europe only Yes New vehicle project Next submittal Strong involvement of the plant management is required in order to make sure that progress is in place.
Yes Yes Yes Yes Required all suppliers Next submittal
Volvo Car Yes Yes Yes Yes Annually. This is a requirement for Q1 Next submittal
Volvo Group Europe, a few suppliers in the Middle East Yes Yes, Brazil India, China Annually self-audit submission and follow-up to be implemented Next Submittal
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OEM Supplier Audit Policy
Supplier evaluations are completed by Chrysler personnel using the Supply Process Analysis (SPA) for new suppliers, new supplier locations, and problem suppliers. The SPA encompasses elements inclusive of the MMOG self-assessment. Additional audits will be conducted on suppliers that have a significant variance in the self-assessment ranking and their actual Chrysler Supply performance rating.
North America and Europe only. Potential suppliers, new suppliers, and problem suppliers. All suppliers will eventually get an audit. Major and problem suppliers will be prioritized.
Suppliers are consulted on the Global MMOG/LE in the Project Phase. Annual audits are not required annually, only during the project phase. In the Trial phase, evaluations are carried out if there are problems with the supplier.
New and problem suppliers
Volvo Car An attempt is made to visit all new suppliers and big volume suppliers. For potential suppliers self-assessment is the first step.
Volvo Group Potential suppliers, new suppliers, and problem suppliers
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OEM Focus During MMOG/LE Audits

• 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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Key MMOG/LE Criteria
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MMOG/LE Processes
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(No Transcript)
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Key Criteria

• 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

• Key Performance Metrics
• Delivery Performance
• Supplier Performance
• Internal performance (plan versus actual)

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KPIs for MMOG/LE
KPI4GMML 1 ASN Performance
Key Performance Indicators for Global Materials
Management and Logistics
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Key Criteria

• 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

• 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

• 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

• 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

• 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

• Supplier Packaging
• Bar code labels
• Process in place to define packaging and pack
  size
• Ensure sufficient packaging material is available

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Key Criteria

• Supplier Assessment
• Methodology to select and evaluate suppliers
• Continuous improvement process for sub-suppliers
• Supplier performance metrics

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AIAG/Odette Benefits Survey
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AIAG and Odette MMOG/LE Survey

• 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 Tier 1 and
Tier 2-3
Regardless of Tier

• 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

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Top Five Performance Improvements Large,
Midsize and Small Companies
Regardless of Size

• 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

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Top Five Performance Improvements by Time
Implemented
Regardless of Time Implemented

• Data accuracy
• Ability to meet ISO TS-16949
• Ability to keep existing business
• Also indicated
• lt 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

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Data Accuracy Positive Performance Improvement
Mean Score Over Time

• Notes
• On a 100 point scale
• Over 60 is considered a strong positive
  response

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General Findings

• 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 by OEMS
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Global MMOG/LE 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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Delivery Rating Improvements

• 1641 suppliers in N.A. completed MMOG/LE
  2006/2007
• As of October 2007, 93 are gt80
• 15 improvement in past 10 years
• 85 of suppliers are at MMOG/LE Level A

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Benefits of Using MMOG/LE China Tier 1
Suppliers 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
• Less errors
• Ability to compare material received versus
  material shipped
• Ability to see ASNs from tier 1s and pay tier
  1s electronically
• Improved communications within the supply chain

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Delivery Score Improvements

• 602 suppliers completed MMOG/LE 2006-2007
• 54 improved in Chrysler delivery rating
• Average improvement to Chrysler rating 30
• 36 improved MMOG/LE score
• 85 are at A level

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MMOG/LE, Volvo Group, update Sept 07

• 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
• gt 850 assessments received, gt 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 Success Stories from
Suppliers
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JCC Company Background

• 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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Results

• 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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London, Ontario Operations Background

• Products include pulleys, dampers and idlers
• Approximately 55 million in sales
• Supplies to OEMs and major Tier 1s
• Major customers include
• Ford
• General Motors
• Nissan
• Automotive Component Holdings (Visteon)

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London, Ontario Operations Results

• Physical Inventory
• Reduced frequency from monthly to annually
• Inventory Value
• Reduced 50 in past years
• Delivery Performance
• On time shipping performance to customers in 2006
  was 99.7
• Delivery ratings to customers providing feedback
  was 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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Global MMOG/LE Projects

• North America
• TRW Freudenberg Akebono Plastech Gates -
  Schefnacker Georg Fischer General Bearing
  Wagon Automotive Lear Schefenacker
• Europe
• ArvinMeritor - Tower Automotive - SNOP - recia -
  Mecaplast - MGI Coutier - Magneti Marelli -
  Treves Robert Bosch - Rieter Automotive -
  Hutchinson SIEMENS VDO Automotive Behr France
  Metaldyne International France TRW France -
  Edscha France Beru Eyquem SAS Amis (Sifcor)
  APM Autoliv France Continental Cooper
  Standard Dunlop roues Electrofil Fabri
  Freudenberg GKN Driveline Gris Découpage -
  Mahle Mann Hummel Alps Fuji Koyo
• China
• Changhua Chaoli Jiaxuan JCC Xiyuan
  Zhongyi Zongshen
• South America
• Mueller

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Supporting Training and Documents Available
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Harmonized Global Training

• 1-Day standardized global AIAG/Odette training

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MMOG/LE Course Objectives

• 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
Americas
Europe
Others
55 people
15 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 (training Fall 2007)
• Additional Seminars held
• Japan
• Taiwan
• Hong Kong
• Thailand

480 people
Mexico
25 people
France
Poland
100 people
160 people
13 people
Brazil
Spain
Russian Federation
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Related Guidelines and Best Practices
Available at www.aiag.org or www.odette.org

• 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

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MMOG/LE Seminars held Globally

• 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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