A clearer look into today’s murky supply chain

Dietrich: 00:07

We really can't predict the future because nobody can. What we can do though, is help auto manufacturers recognize prepare for in profit from whatever comes next. auto supply chain prophets gives you timely and relevant insights and best practices from industry leaders. It's all about what's happening now in the automotive supply chain and how to prepare your organization for the future. Because the auto supply chain is where the money is.

Jan Griffiths: 00:40

Welcome to another episode of auto supply chain prophets. And with us today is the one and only Bill Hurles. Bill has deep, deep knowledge of the supply chain. You know, what's funny bill, I started to do some research on you before this recording, and I looked at LinkedIn. And there's just one line it says, Former Retired Executive Director of Supply Chain at General Motors.

Cathy Fisher: 01:09

Well, Bill we'd love to find out how did you end up in the automotive supply chain as your career?

Bill Hurles: 01:15

Okay, you know, my path was kind of unique in the respects that formal education. I started with an engineering degree, a mechanical engineering degree and an MBA and started with General Motors and working in the engineering side of the business and spent the first five, six years in engineering. And then I came to a point of transition. One of my mentors so suggested that I get some manufacturing experience, I moved into a role actually as a skilled trade supervisor, spending a few years working in the maintenance area of one of our transmission plants. And then an opportunity came along to move into manufacturing. So I moved into manufacturing as a general supervisor, and then became it was referred to as an area manager heading up the assembly side of our transmission plant. And during that time, the GM was focusing on LEAN manufacturing, a la Toyota Production System. In my role of manufacturing, I was working very closely with our materials management. As we're starting to implement, I would say early generation of just in time inventory, TPS, lean manufacturing, were starting successfully to start to see some of the benefits of that the changes in the workplace. And the plant manager approached me one evening about moving into heading up the supply chain side of the business. At a plant level, your supply chain organization includes your supply chain operations, your purchasing your supplier quality, and scheduling and planning. And that was my first introduction into that role. I remember telling the plant manager I said, I'd love to take on the opportunity. But to be honest, I don't have any formal education in that and he goes, I think we can succeed. So I spent a couple years in that role. I was then moved to a divisional role. I went down to the Saturn Corporation with General Motors plant down in Tennessee, where I was the Vice President of purchasing and supply chain supplier quality. And then following that I returned, and I took on a role as our North America a Head of supply chain. And then in the last few years, was responsible for our global supply chain. It was one path that I hadn't necessarily planned. But it was an area that I really enjoyed doing.

Cathy Fisher: 03:35

Wow, I'm interested to find out to what extent were you able to bring LEAN into your supply chain activities.

Bill Hurles: 03:43

It began at the plant level, as I'd mentioned, and GM had created what we call the green book. It was a kind of a guideline and some experts that had really studied Toyota Production System. We were able to move to a minimal lineside, presentation of components. We work with delivery. And when you really look at lean and an operation. It's all about waste elimination. How do we right size the presentation to support the operator? How do we improve quality? How do we minimize inventory? And in the ironic part is the plant that I was at was actually in Warren, Michigan, one of my earliest assignments was to build a big stacker building for holding, we talked about having 10 to 15 days of inventory. And we're very proud of that. As I moved into lean applications, the goal was eliminate that warehouse. We said we don't need that. You know implementing LEAN, it's a continuous journey, you can always improve. As I matured, in my knowledge, and as we implemented further, we really tried to look at it from a total enterprise standpoint, at a plant level and very focused on from a local application. But as you moved into a divisional corporate role, and really trying to look at the entire system, tying it containerization your logistics, your scheduling your capacity control

Cathy Fisher: 05:00

That's so amazing. And you know, I remember the days when I worked at GM, and we had, like you said, weeks of inventory like literally floating overhead in the mezzanine. You remember that in the buildings there? I've heard a lot since really the semiconductor crisis over the past year and a half, almost two years now that organizations are saying, well, LEAN doesn't work. Because look where we're at, we should, you know, we should have had more inventory so that we could buffer the impacts of COVID and the semiconductor, what are your thoughts on that?

Bill Hurles: 05:34

I think it's so myopic. Look at lean, or just in time, what we have to remember, is lean is really a system. It's not an event and within that whole system, inventory buffering is one of the strategies that you want to optimize. And I think sometimes people just look at that, because we've run out of parts, the whole system doesn't work. And to me, that's not correct. That's a myopic look at the entire system. Yes, I agree that the buffering and really the management of called tiered supply. Because most of your semiconductors are components that are provided to tier one or tier two, that then ships to you. And really, the risk mitigation of that component has not been properly planned. Now, we've had some pretty drastic situations that have occurred that led to that. But I think it does point out that it's really, critically important that suppliers and OEMs look deeper into their supply chain, and look at not only buffering, but I'll also say even control of that inventory. And I think in today's world environment, especially as unfortunately, what's occurring in Ukraine, there was a lot of discussion about some of the raw materials being constrained. I'm sure that our colleagues in this area are digging deeper. But I would really suggest when they say just in time doesn't work. I don't think that's an accurate assessment. And I think organizations should avoid making change, I think what we've got to do is improve the process.

Terry Onica: 07:07

Bill, what do you believe are the root causes of the chronic supply chain issues that we're facing today?

Bill Hurles: 07:13

I think there's a number of items that are leading to that today. One is really that lack of visibility into the supply chain. I think organizations have good visibility, good control of their tier ones. But I think as you go deeper in that supply chain, many organizations are invisible to what the inventories are, what should be maintained, and really controls of that. And I think semiconductors has really surfaced as an example of that. But I think that's that's one one cause of today. I think the second is the integration of the information. You know, we often hear about blockchain, which is really, in my vernacular, my understanding, really visibility into an almost cradle to grave type of understanding. Most organizations don't have that. And most OEMs don't have that, as you look deeper. And as you think about not only information that you understand, but also more efficient communication of requirements, of planning, we often lack that. So we really depend on our called manual handoffs of information from tier to tier to tier. And so that becomes a problem. And I think we also got a shortage of talent and skills, especially with what's what's occurred in the industry. As the OEMs came out of bankruptcy, there was a lot of employees and positions reduced. There's capacity reduced. Then now with COVID, it's caused a huge changeover. So I think you also have a lot of needs from a talent standpoint.

Terry Onica: 08:44

Just to add on to that. What do you think if you were in your role today as the Executive Director of Supply Chain at General Motors, if you went back to that role, and today, what would you do to get down to that lower level of the supply chain? What do we have to do differently? Any thoughts on that?

Bill Hurles: 09:02

Yeah, that's a that's a real challenging question. You know, I've often thought about reaching out to my, the person that has replaced me, Dave Leach, who is an incredibly smart manager and director, and we do a talk off. First, Jerry, I think I would really be looking at what are my critical components had mentioned earlier, what's happening today? I think I'd begin to put, you know, maybe it's even a task force to really deep dive, what is our risk and really understanding and working with the other functions, engineering and quality? How do we put together mitigation plans, both for availability, but also for capacity? And also what are options? One of the challenges that in semiconductors is another good example. You can't instantaneously change suppliers or product. Many of these products require validation. You can't make a change without going through a rigorous protocol for the good of the customer and the good of the quality for the customer, and some of these can take up to a year, I would be focusing on where the shortages are. And that's simultaneous, I'd be looking at the talent in my organization. Many of the young college graduates that are coming into the workforce today are very, very skilled. I've had the opportunity to work closely, as you guys know, working with Wayne State and AIAG in training and teaching. But I think one of the gaps that we got to continue to focus on is how do we provide continuous education for experienced people? It's an area that I focused on is, you know, since I retired is, how do we bring the skill sets up of all people? Entry level is very strong today with graduates and supply chain and procurement logistics. But I just think that an area of opportunity to continue to help all of our employees grow, that would be the other area I'd be focused on. How do I continue to increase the skills of my team?

Cathy Fisher: 10:50

Yeah, so it sounds like is that it's really about building the foundation and the systems of supply chain versus just reacting constantly to what we're, we're being bombarded with on a daily basis. Now, Bill, you're familiar with the 24 essential supply chain processes that Terry and I have identified? And really are looking to weave into organizations management systems? How would you recommend organizations adapt those 24 essential supply chain processes?

Bill Hurles: 11:22

That is a real foundation to help in as I just mentioned a minute ago, as we think about experienced employees, and even new, it's a whole system in most people in in supply chain really work in an area of especially in an OEM where you're such a large, broad business, and you have such a large number of parts and suppliers, often people are kind of siloed for a portion of their career or the assignment they currently on. And what's great about the 24 essential steps is it gives you a holistic understanding of the entire system, what I would encourage and embrace is that all employees within the area of procurement or supply chain logistics. But just as importantly, some of the organizations that that marry up with you, such as supplier quality and engineering, having them understand the system, it's not extremely complex, but often we don't understand how the pieces fit together. And the 24 essential steps really give people a broad understanding, I know what was built out of the MMOGLE information that was gathered under AIAG. It's an outstanding foundation to broaden people's knowledge and skills and understanding. And what I like is how it's been written. It's very easy for people to follow. The 24 steps is much simpler and much more applicable to the auto industry.

Terry Onica: 12:50

Yeah, Bill, we really agree we really have to break these silos down. It's a it's prevalent in our industry. And I totally agree with you. You know, that's what Cathy and I were really thinking we put that together. Supply chain quality, like you said, engineering, IT getting together at the same table and working together to look at those we think is going to be really helpful.

Bill Hurles: 13:10

Yeah, I think sometimes you bring up IT. It's an area that sometimes we look at it as a solution. And I don't think it is, I think it is part of the system. So very, very important part, no doubt, capabilities are advancing very rapidly and what can be done, the question then becomes, how fast can my teams adopt to that capability? And how applicable is to my existing systems? How do I integrate that into my existing MRP? But I do think that's both an opportunity and a challenge. And I think it needs to be done in sync with your suppliers.

Cathy Fisher: 13:42

Yeah. And I love that you are so supportive of the younger generations encouraging them to pursue careers in the automotive industry. And I'm finding that their expectation is, why are we not automating and utilizing all this great technology that's available? And when they come in, and they're faced with a green screen or an Excel spreadsheet? They're like, I'm out of here.

Bill Hurles: 14:03

Exactly. Exactly. And, you know, Tom Linton, familiar with Tom, he's written a number of books on supply chain, and he's a real strong advocate of applying AI. And I think as you look at the future of supply chain capabilities, as Tom points out, a lot of information goes through manual handoffs, if you think about it, as we adjust buffers, or as we adjust for suppliers performance or our own needs, is generally done manually. People go in and input they make a change on a min max setting or whatever, or delivery time or delivery frequency or container. So that can be automated. And I think that's going to be the opportunity to futures because it's all about velocity. How do I move material faster? How do I know where the information is? How do I flow information down through the supply stream quicker?

Cathy Fisher: 14:53

Yeah, you're absolutely right. And that was really what motivated Terry and I to dig into identifying these 24 essential supply chain processes was we realized as we move more towards online sales of vehicles, the back end has got to keep up with the expectations of consumers. And let's face it in the Amazon world, everybody wants their stuff in two days.

Terry Onica: 15:14

Yes. And when you look at AI, I agree, Bill. It's so exciting to think that we can have information if we put it in the system and everybody has access to it. And it's, it becomes more and more accurate to get to a predictive, right? To understand exactly, you know, what our position is and to suggest, hey, you need to go look at this because the data is looking at multiple areas and saying, Hey, this looks like there's going to be a problem. Maybe it's a problem supplier, you know, it's looking at quality supplier data, and it's telling you hey, this supplier might be having trouble before you even know it.

Bill Hurles: 15:49

Absolutely.

Jan Griffiths: 15:50

Hey, Bill, if you were to boil all of this down into one specific action that auto manufacturers must take now to ensure the success of their supply chains in the future. One thing, what would that be?

Bill Hurles: 16:07

I think the OEMs need to take more control of some of the sub-tier components. I really believe that today, through a tool that's often used, directed by when you may define what the component or the raw material is to be, because that's what we're validating. But we don't really control it, we count on the tiered supply base, and it may be a tier one, tier two to do that, I think what has to happen is especially in I'll call it at risk components, or commodities, the OEMs need to have better control of that, as I look at other industries and electronics and use Apple as an example, they have a much more defined responsibility there. I could see a day where the OEMs actually purchase the material, maybe even warehouse it and then distribute it. So that is that you're able to control both quantity and usage. And tied in there is also complexity reduction. If you look at it, it's very easy. I mean, semiconductors and example, there's many different producers of semiconductors, maybe it's a handful, it's not not 1000s. If you look at streams of variation and as to try to improve quality, complexity reduction is a real important tool to enable that. So I would work in that area. Jan, I think that's where I'd put my focus is, especially in light of today's environment. We need to help manage our own destiny at a stronger level than we ever have in the past.

Jan Griffiths: 17:42

And there it is, manage your own destiny. Supply chain insights from one of the best. Bill Hurles, thank you for your time today.

Bill Hurles: 17:51

It's my pleasure.

Dietrich: 17:57

Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how, or click the link in the show notes below.