MMOG/LE
Materials Management Operations
Guideline/Logistics Evaluation
November 2007
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Agenda
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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
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Gain control of processes
– Reduce inventory carrying
costs, 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?
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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
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Universities
High Schools
Other non-automotive industries
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Hospitals
Construction
Aerospace
Chemistry
Electronics
Industrial
Retail
What is MMOG/LE?
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Principles of Global MMOG/LE
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Recommended standard for materials and logistics
Self-assessment tool for identifying gaps in processes
Based on agreed business processes
– By OEMs and suppliers
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 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% < 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
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Strategy and Improvement
Work Organization
Production and Capacity Planning
Customer Interface
Production and Product Control
Supplier Interface
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MMOG/LE Translations
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Available in 10 languages including:
English
Spanish
Romanian
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French
Portuguese
Czech
German
Chinese
Russian
Over 2000 trained users in 16 different countries
What Does this Mean to Me?
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Attend AIAG/Odette MMOG/LE standard training
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Complete self-assessment
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Attend self-assessment education and review
Develop gap analysis and action plan customer, internal, and
sub suppliers
Implement Action Plan
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Understanding and building a team to complete assessment
Internal processes and systems
Sub suppliers (e.g, Tier 2)
Customer certifies self-assessment score
Completing the Self-Assessment
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Download the Self Assessment
odette.org or aiag.org
ENGLISH
FRENCH
CHINESE
Complete the Form
Each 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
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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)
Who is requiring MMOG/LE?
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OEM
EMEA
North
America
South
America
Asia/
Pacific
Frequency of
Submission
MMOG/ LE
v2 Usage
Europe
Yes
TBD
Yes
Annually
Next
submittal
Yes
Yes
Western
Europe and
Central and
Eastern
Europe only
By Jan.
2008
Yes
Yes
Comments
Next
submittal
Currently, all regions
using MMOG/LE for Q1
require Level A except
Europe and Asia
Pacific, which currently
accepts Level B.
New vehicle
project
Next
submittal
Strong involvement of
the plant management
is required in order to
make sure that
progress is in place.
Annually. This is a
requirement for
Q1.
Yes
Yes
Yes
Yes
Required all
suppliers
Next
submittal
Yes
Yes
Yes
Yes
Annually. This is a
requirement for Q1
Next
submittal
Yes
Yes,
Brazil
India,
China
Annually self-audit
submission and
follow-up to be
implemented
Next
Submittal
Volvo Car
Volvo Group
Europe, a
few
suppliers in
the Middle
East
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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
An attempt is made to visit all new suppliers and big volume suppliers. For potential suppliers self-assessment is
the first step.
Volvo Car
Potential suppliers, new suppliers, and problem suppliers
Volvo Group
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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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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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KPI’s for MMOG/LE*
KPI4GMML 5
Production
Disruption
KPI4GMML 6
Supplier Communication
& Cooperation
Criteria : Self-sufficiency, Reliability,
Responsiveness Supplier
problem notification,
Availability, Flexibility
KPI4GMML 4
Material Handling & Identification
Schedule
Modifications
Incomplete units
Line Stops
or
Delivery Requirements
Supplier
Plant
D
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C
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ASN Message
D
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Warehouse
Assembly Line
Customer Plant
or
KPI4GMML 1
ASN Performance
KPI4GMML 2
Delivery
Accuracy
KPI4GMML 3
“VMI”
*Key Performance Indicators for Global Materials Management and Logistics
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
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Engineering Change Control
− Participate and formal sign off
− New parts/past models/inactive parts
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Shipping
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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
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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
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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
Top Five Performance Improvements:
Tier 1 and Tier 2-3
Regardless of Tier:
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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
Top Five Performance Improvements:
Large, Midsize and Small Companies
Regardless of Size:
1. Data accuracy
2. Ability to meet ISO TS-16949
3. Ability to keep existing business
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Large suppliers also indicated
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Delivery accuracy and inventory control
Midsize suppliers also indicated
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Supports lean implementation and new business
Small suppliers also indicated
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Overall supplier rating and new business
Top Five Performance Improvements:
by Time Implemented
Regardless of Time Implemented:
1. Data accuracy
2. Ability to meet ISO TS-16949
3. 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
Data Accuracy Positive Performance
Improvement Mean Score Over Time
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Notes:
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• On a 100 point scale
• Over 60 is considered
a strong positive
response
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<1 Year
1-2 Years 2-3 Years 3+ Years
General Findings
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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
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Minimal differences between N.A. and Europe
– Performance improvements were consistent
MMOG/LE Results Identified
by OEMS
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Global MMOG/LE Benefits
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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
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1641 suppliers in N.A. completed MMOG/LE 2006/2007
– As of October 2007, 93% are >80
– 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 Supplier’s Opinions
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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 ASN’s from tier 1’s and pay tier 1’s electronically
Improved communications within the supply chain
Delivery Score Improvements
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602 suppliers completed MMOG/LE 2006-2007
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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
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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
Success Stories from Suppliers
JCC Company Background
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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
Results
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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
London, Ontario Operations Background
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Products include pulleys, dampers and idlers
Approximately $55 million in sales
Supplies to OEMs and major Tier 1s
Major customers include:
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Ford
General Motors
Nissan
Automotive Component Holdings (Visteon)
London, Ontario Operations Results
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Physical Inventory
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Inventory Value
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Delivery Performance
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Supplier Performance
– Reduced frequency from monthly to annually
– Reduced 50% in past years
– On time shipping performance to customers in 2006 was 99.7%
– Delivery ratings to customers providing feedback was 100
– 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
Global MMOG/LE Projects
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North America
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Europe
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China
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South America
– TRW – Freudenberg – Akebono – Plastech – Gates - Schefnacker – Georg Fischer –
General Bearing – Wagon Automotive – Lear – Schefenacker
– 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 …
– Changhua – Chaoli – Jiaxuan – JCC – Xiyuan – Zhongyi – Zongshen
– Mueller
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Supporting Training and
Documents Available
Harmonized Global Training
 1-Day standardized global AIAG/Odette training
Training
Slides &
Instructor
Manual
Odette/AIAG
MMOG/LE
Work Group
Participant
Manual
Implementation
Toolkit
MMOG/LE Course Objectives
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Continuous
Improvement Tool
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What is the
MMOG/LE?
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Assessment
Gap Analysis
Implementation
MMOG/LE
MMOG/LE Training and Seminars World Wide
America’s
Europe
Others
55 people
United Kingdom
United States
of America
700 people
15 people
177 people
Czech Republic
180 people
Sweden
China
6 people
4 people
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Slovac Republic
Iran
Canada
130 people
50 people
Germany
Romania
Turkey
200 people
480 people
Mexico
France
25 people
Poland
100 people
160 people
Brazil
Spain
15 people
13 people
Russian Federation
• India (training Fall 2007)
Additional Seminars held:
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Japan
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Taiwan
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Hong Kong
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Thailand
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Related Guidelines and Best Practices
Available at www.aiag.org or www.odette.org
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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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