Version 6 of MMOG/LE integrates supply chain processes and can reduce a company’s inventory by up to 60%. But cost savings isn’t the only reason to love this self-assessment.
IATF 16949 hasn’t been updated since 2016. As the auto industry applies pandemic-era lessons to quality systems, MMOG/LE raises the bar for effective supply chain management and encourages collaboration across all functions in an organization.
In this follow-up to How MMOG/LE Is Transforming The Automotive Supply Chain, the Auto Supply Chain Prophets dive into the quality components of MMOG/LE and examine its role alongside existing IATF standards.
Themes discussed in this episode:
- How MMOG/LE v6 addresses quality standards.
- Supply chain processes suffer from high-level work instructions that lack details.
- Quality and supply chain need to involve IT for the systems to work together.
- Many organizations have incongruencies between the cutting-edge technology they’re adding to vehicles and the outdated processes used to produce it.
- The right processes can help startups leapfrog traditional OEMs.
- What supply chain leaders can do right now to support their future success.
At the heart of The Prophets’ vision are “The 24 Essential Supply Chain Processes.” What are they? Find out, and see the future yourself. Click here
Featured on this Episode
Name: Cathy Fisher
Title: Founder and President, Quistem
About: Cathy’s firm helps its clients, particularly automotive manufacturers, eliminate customer complaints and increase their profits. She has worked in the automotive supply chain since the 1980s when she started her career with General Motors.
Name: Terry Onica
Title: Director, Automotive at QAD
About: For two decades, Terry has been the automotive vertical director of this provider of manufacturing Enterprise Resource Planning (ERP) software and supply chain solutions. Her career began in supply chain in the late 1980s when she led a team to implement Electronic Data Interchange (EDI) for all the Ford assembly and component plants.
Timestamped inflection points from the show
[2:01] Answering the naysayers: Terry consistently sees customers reduce inventory by 15-60% after a proper MMOG/LE implementation. She challenges anyone who doubts the assessment’s cost-saving powers.
[3:59] Automating the response: Lower tiers support electronic data interchange (EDI) so they can react to OEM demands. Terry and Cathy discuss the importance of automation in supply chain communication.
[6:23] Explain yourself: Terry says the high-level work instructions she sees from suppliers are often “pathetic.” With QAD, detailed work instructions are included for every process.
[12:16] What’s new with v6: From environmental, social and governance (ESG) criteria to risk assessment, Cathy and Terry outline the recent updates to the MMOG/LE.
[17:29] 68 points of integration: The conversation moves to IATF and its intersection with MMOG/LE. Cathy explains the importance of quality standards in the new MMOG/LE and why the auto industry has moved away from ISO/TS standards.
[21:10] Value flow: Supply chain, quality and IT teams must work together to achieve customer satisfaction. Terry and Cathy agree on easy fixes to streamline supply chain processes in any organization.
[24:40] Playing leapfrog: Jan and Terry discuss changes in automotive culture and leadership. With the right resource planning mindset and processes, startups can speed past many of the legacy systems at traditional OEMs.
[26:01] ‘I can do more on my cell phone’: Cathy explains why congruency between the technology developed for vehicles and the processes used to produce it is vital for talent retention and long-term success.
[30:26] The one thing: Cathy and Terry share their advice for CEOs and supply chain leaders. “Money is made in the supply chain, not just on the shop floor.” Leaders need to recognize their organizations’ true value streams.
[4:35] Terry: “The lower tiers are just dying to know — what is the demand that’s coming in from the OEM? They want that information as quickly as possible so that they can react.”
[11:29] Jan: “It’s this little bitty part that didn’t come in because somebody didn’t set it up right in the system … I’ve seen that happen time and time again, and now you’re talking big money because now you’re going to risk missing a launch date. And there’s nothing that a CFO of an automotive company hates more than an unplanned expense.”
[22:06] Cathy: “We can start with quality and supply chain because those are the two elements of customer satisfaction: quality and delivery. If those systems and processes are not working together, you have no hope of making your customer happy.”
[26:04] Cathy: “We are at a point in our industry where the technology level on the vehicles that we’re producing is basically a supercomputer on wheels. If we really think about it, how can you manufacture a supercomputer on wheels using green screens and Excel spreadsheets?”
[32:57] Cathy: “Until we embrace that supply chain is the through line to cash, that it is the through line to making money in the business, [quality leaders] are going to suffer. They’re going to constantly be reacting instead of being able to predict their future success.”
At the heart of The Prophets’ vision are “The 24 Essential Supply Chain Processes.” What are they? Find out, and see the future yourself. Click here
Jan Griffiths: 00:03 Welcome to the Auto Supply Chain Prophets podcast where we help you prepare for the future in the auto supply chain. I’m Jan Griffiths, your co-host and producer.
Cathy Fisher: 00:13 I’m Cathy Fisher, your podcast host. Our mission is to help automotive manufacturers recognize, prepare for, and profit from whatever comes next in the auto supply chain.
Terry Onica: 00:23 I’m Terry Onica, your podcast host will be giving you best practices and key supply chain insights from industry leaders.
Jan Griffiths: 00:29 Because the auto supply chain is where the money is. Let’s dive in!
Jan Griffiths: 00:37 Hello, and welcome to another episode of Auto Supply Chain Prophets podcast and today, we are gonna dive right into not only MMOG/LE, but also IATF. What about that intersection between IATF and MMOG/LE And let’s not forget, we’re talking about version six now on MMOG/LE and I hope our audience is well versed with what’s happening, but more importantly, what are the benefits to their business? And you know what we always say, money is made in the supply chain. So, let’s figure out how we can do more of that. What do you think about that? Cathy Fisher?
Cathy Fisher: 01:17 Yes, Jan. Indeed, we definitely want to leverage our supply chain processes, just as we’ve done with our quality processes. But rather than treating them separately, let’s merge them together. And that’s really kind of the emphasis that we are taking forward with this new version six of the MMOG/LE is being able to recognize where can we truly integrate these criteria associated with supply chain into existing processes, maybe from a quality management standpoint, or if we’re having to develop some new processes, let’s say around ESG, that we are also looking for those opportunities for integrating with other business processes.
Jan Griffiths: 01:53 Yeah. What do you think, Terry? We’re back here on the mic for season two. And we’re getting into a subject that you know a lot about, MMOG/LE.
Terry Onica: 02:01 Yes. And one thing that I really like to remind everybody is I’ve seen so many times and consulting with suppliers on it anywhere from a 15 to a 60% reduction in inventory. One customer I work with that amount 600k worth of savings. So we have to keep that in mind. MMOG/LE really does transform your supply chain. And so I’m really excited about that.
Jan Griffiths: 02:23 I know, Terry, we talked about this in the last episode with Tanya Bolden. Those numbers that you cite, I know they’re real because they come from you. And that’s that’s who you are. And they have full credibility. But I just got to believe it, there’s a lot of supply chain people out there that are rolling their eyes going “oh, yeah, right, right, right, like MMOG/LE. Like that’s going to reduce my inventory. And I think that that’s why I really want to explore this some more today. What do you say to the naysayers out there?
Terry Onica: 02:53 So, what I say to the naysayers is if you’re not reducing inventory, you didn’t do a proper assessment on yourself. So, MMOG/LE is a self assessment. So, if you’re not getting those kinds of savings, somebody may have pencil whipped your MMOG/LE assessment. So, we really need to make sure that we are really accurately reflecting what we are doing every day in the business and supply chain. So, you need to go back and look at. The lowest I’ve seen after following up with a customer after we’ve done a proper assessment is 15%. The maximum like I said has been 60%. Every time Jan, every single time. So that’s what I say to naysayers.
Jan Griffiths: 03:34 Strong words out there from from Terry, Cathy. What do you have to say about that?
Cathy Fisher: 03:39 Yeah, well, actually, I wanted to ask Terry, I know inventory reduction is a really key benefit of implementing and organizing those supply chain processes using MMOG/LE. What are some of the other benefits that organizations have achieved as a result of really leaning in and adopting that focus of supply chain using MMOG/LE?
Terry Onica: 03:59 The other area where there’s a lot of naysayers is, “Why do I have to do EDI or web EDI with my suppliers?” And that’s the other area which I think helps towards the inventory reduction is once we get that whole process automated from customer EDI through the suppliers, is you get a faster response to business. And that then helps you better manage that inventory coming into your organization. The other thing I hear a lot of tier one suppliers is my tier two suppliers not gonna want to do EDI, I’m gonna fight them. And what they find is the exact opposite because the lower tiers are just dying to know what is the demand that’s coming in from the OEM. They want that information as quickly as possible so that they can react to you as the tier one so that’s the other really big area I’ve seen. Oftentimes suppliers do get into trouble and they gotta take an assessment have the customer come in and audit again. And so they may go from like getting an 80% or lower supplier performance rating after we get with done with MMOG/LE, they are right back up there at 100%. Again. So these are a few of the areas that I think are really big for organizations. One other thing too is making sure that people have the proper work instructions. Cathy, I know you and I are really passionate about this to come into work every day and do what they need to do on the job. So, that is another huge benefit to MMOG/LE. Everybody knows what to do when they come to work.
Cathy Fisher: 05:26 Yeah, I mean, that’s one of the things that unfortunately, I find many organizations are not documenting those supply chain processes, as well as they have done with their quality processes. You know, we’ve had 30 plus years of experience and formalized quality management. And even of course, the IATF 16949 standard takes it one step further and says you’re gonna have standardized work, work instructions, right. And so organizations, I think, do a good job in the manufacturing side. But when you start looking at the supply chain processes, even physical logistic type processes, there’s nothing maybe there’s some like printouts of screenshots or something. But there’s really not good work instructions that can guide the people who are performing those processes to consistently get the desired outcomes. So, I think that’s really important point. I was glad to see that that’s still a criteria in the MMOG/LE, it is definitely one of those key intersection points with your quality management.
Terry Onica: 06:23 Hey, Cathy, what I see when I go out and work with suppliers and MMOG/LE is work instructions are the biggest pain point. I’ll say, show me your work a second. I know you’ve seen them too. And they’re pathetic, they’re too high level, they’re not detailed enough. Oftentimes in supply chain, we are using system. So, they have to tell us how to maneuver in the system, it can’t be some high level work instructions. So, what I often see, it’s just that lack of detail, they’re not strong enough. And therefore when new people come in, they don’t know what to do. And so what do they start doing? They go back to spreadsheets, the word that I hate, because they just don’t know how to use the system. And so, paying attention to those work instructions, and putting the proper detail on them is only going to really drive a lot of good value to the organization.
Jan Griffiths: 07:08 Why do you think that is? I’m just curious, Terry, why do you think that is? Why do you think people don’t pay enough attention to work instructions for supply chain? Because when it comes to the shop floor, when it comes to product? They’re all over it, right? But why? Why do you think that is?
Terry Onica: 07:23 I think number one, they’re not trained properly. To do it. We just don’t think of doing work instructions as applied to. We think they pertain to quality. So, I think that’s one issue. I think another issue is people will give you a million reasons why they don’t have time to do one, right? We all hate documenting something. So I think there’s a tendency to just I’ll just do it at the high level. And it’s good enough, and I can turn something in. So, I think those are the things that we’re battling against. Other times, I think it’s just, they don’t maybe know how to learn this is because they didn’t weren’t trained properly. So, we’re lacking them from that point of view, too. But I’ve seen suppliers take like six months to build all the work instructions while doing their normal job. So, that’s a lot of time. So, really is there’s no time like the present to make sure that they’re documented properly.
Cathy Fisher: 08:11 I think part of the the reason why the work instructions are lacking or non existent in many cases is because there’s a lack of understanding of those processes. And when we’re working with organizations in helping them identify and document, define their processes. When we start talking about these supply chain processes. There’s very few people in the organization who really have a handle on what’s supposed to happen. What is that sequence of activities that need to transpire in order to have an outcome that’s going to meet the customer’s delivery requirements. And then the second piece is, they don’t want to take the time to detail at the level of detail that’s necessary, the work instructions. So without having the procedure, first, the work instructions, it’s very difficult to get a handle on what those should look like, what’s the level of detail that’s necessary there?
Terry Onica: 09:04 And, Cathy and I are working with the 24 essential processes. We go, actually we work with our own QAD customers, and we say, show me your work instruction. And we get a work instruction like, this is not very good. And it’s one that has to pertain say to MRP. And so, I’ll immediately ask suppliers because with QAD, we fully give you all the work instructions to run every process and QAD and we’ll say Why aren’t you using the QAD work construction, it’s there it’s fully documents the right level of detail. And you know what they tell us, Jan? IT shut them off. So, there’s cases where your ERP has it in there, you won’t have to do any work and the materials department doesn’t even know it. So, that’s why Cathy and I say this intersection of quality supply chain IT getting everybody in the same room.
Cathy Fisher: 09:53 Yeah, one of the nice things about those instructions that are included in QAD is that you can go in there and adapt them specific to your organization is a great starting point of the necessary detail that’s needed to perform that transaction or, or perform that work for the system. But you can also go in and adjust them relevant to your organization. So, you’re not kind of hemmed in with just that which is presented.
Jan Griffiths: 10:20 And I think from a recovering supply chain, persons perspective, you see this rear its ugly head when you launch a new program. Right? Because and I will, I will be perfectly honest. And I will, first of all, I validate everything that you said is true and correct. But from my perspective, in previous supply chain roles, I will tell you that it was like, Well, surely people know how to do that, right? Surely somebody else knows how to get that done. I never thought that I would have to focus into an organization and drill down into defining all the supply chain processes. I thought, call it ignorance, call it whatever you want. But I think there’s a lot of people that think this way, it just happens. And the reality is it just doesn’t. And what when you start to launch a new program, then all of a sudden, you know, parts aren’t coming in when they’re supposed to. And you’re like, Well, what, what happened? Well, some little itty bitty part in the process wasn’t well defined. And it’s usually some C- Class item, it’s usually a fastener or something didn’t come in on time, you got all the the big expensive stuff in. But it’s this little bitty part that didn’t come in because somebody didn’t set it up right in the system, because it didn’t have the right order quantity. It wasn’t released on time, the supplier wasn’t connected to the EDI, somebody used the spreadsheet back to Terry’s pain point. So, I’ve seen that happen time and time again. And now you’re talking big money, because now you’re going to miss a launch date or your risk of missing a launch date. And there’s nothing that a CFO of an automotive company hates more than unplanned expense, when they’re hit with that cost and expedited freight and on and on and on, let alone the customer dissatisfaction that has a massive impact to the bottom line. So, there really is a lot here to unpack. But I’d love to come back up to a macro level and ask you, Terry, we’re talking about version six now of MMOG/LE. Why? What’s the main purpose and impact of revising MMOG/LE?
Terry Onica: 12:29 So today, there are over 57,000 assessments in the MMOG/LE database. AIAG and Odette want to make sure they keep that document current. The last time it was released for version five was fall of 2019. We know what came a few months later, we had COVID. So, in the three to four years, we have learned a lot about supply chain disruption. When we looked at version six, there was a lot of topics that we needed to take a look at and make sure we incorporated and our lessons learned into version six. So first of all, there is the environmental, social and government compliance, we all know ESG is a big hot topic. And it’s getting mandated by governments around the world to adhere to it. So, we looked at that from customer requirements internal and then with your suppliers managing that whole ESG process. The other area that we looked at as well, too was in risk, supply chain resilience and business continuity. Obviously, we know that’s really important, making sure that you’ve got a plan, you’ve looked through all possible risks, you’ve got ways to recover, that you’ve again looked at that very closely. We looked further into the training of employees, that used to be an F two question. So it’s now an F three. So, what that means is when it goes to an F three, if you miss just one MMOG/LE, just one of three questions, it’s very penalizing, it’ll drop you to a level C score, which is the lowest score possible. So, we wanted to make sure with employee training, that it’s there and ready. So that as people come and go, which we’re having a lot of problems with right now. There’s the proper training programs that are in place. Also scenario planning. So, we have a lot of volatility. I mean, I know we all three of us were at the OESA conference. And that was a hot topic. So, looking at scenario planning, sometimes we need a plan like with semiconductors beyond the OEM forecast, and then just looking at the different possibilities that may happen because everything’s just in such a state of flux these days. And then the last one, we made supplier scheduling the ability to send that schedule directly from the planning system or the ERP system to the supplier through the EDI process. As an f3 question. We want to make sure that was one area that we still was an F two that now is an F three. So, that whole planning process is now mandated in your ERP or your planning system. So, those were some of the key areas that we’d looked at.
Cathy Fisher: 14:58 Does this mean that there’s more F threes in the version six than there were in version five?
Terry Onica: 15:03 Yes, absolutely. There are more f3 questions. Some of the f3 questions that are new are managing phase out parts, managing obsolescence, and then like I said, again, the supplier schedules are new f3 questions in version six.
Cathy Fisher: 15:20 Yeah, you know, I love that the things that you guys elevated F three are exactly the things that really motivated us to start on this journey around focusing on supply chain things like service parts, we talked about phase out in service parts. Before COVID, there was this crisis that was going on in the service parts field, where the cars were coming into dealerships to get serviced, and the dealership was saying, hey, sorry, you’re gonna have to go rent the car or, you know, do something else, because it’s going to take us six months to get the replacement part of spare parts that you need. And then, of course, the other point regarding automating the scheduling. That’s exactly what put us in the semiconductor situation that we are still embroiled in today, right? So..
Terry Onica: 16:03 When we do our 24 essential supply chain process reviews, that was another one outside of work instructions, the next biggest one, how many suppliers that we found out we’re doing purchase orders, instead of doing supplier schedules, and we recommended to them, you should be doing schedules on that purchase orders. So that’s another big finding, we found in our 24 essential process reviews with organizations.
Cathy Fisher: 16:25 And that’s a great illustration of organizations not really understanding their supply chain processes, I think everybody kind of gets how to issue you know how to request an initial purchase order in their system. But when you start talking about the, I don’t even want to say complexity, but there may be is a perceived complexity behind rather than individual purchase orders. Now I want to establish a schedule, and have an overall blanket agreement that I’m drawing requests off of, and a lot of organizations don’t really understand how that should work, let’s say just the process flow. And then secondly, how that supposed to actually be executed inside their ERP system. So, this is where they’re either defaulting to a million individual POS, or they’re going off on spreadsheets, to make sure that we’re in the right stuff.
Jan Griffiths: 17:19 And that’s why I love that 24 supply chain process document because it really is a holistic view. And it’s well thought out, talking about being well thought out, let’s go into another realm. Here. Let’s talk about IATF. Cathy, you are passionate about IATF. And let’s talk about the intersection of IATF and MMOG/LE. Now, most of us in the supply chain world, certainly do not want to take MMOG/LE and take IATF and go through both of them and and figure out where the intersection is. And that’s a lot of work. And that you know, quite frankly, I’d rather have a pickaxe in the forehead than go through that, right? And I’m sure most people would, but you did it because you love it. So, what do you find?
Cathy Fisher: 18:08 Well, so we found quite a few things are and just kind of like looking at the detailed analysis, we don’t just look only at IATF 16949. For now, we’re also looking at ISO 9001. Because of course, that’s the foundation requirements for our automotive quality management system as well. And so what we actually found is that, even though there’s been some changes to the MMOG/LE criteria, there’s still a lot of consistency to the quality standards. So, we actually found 68 criteria that are essentially a reflection of what you would see in your quality management system. So there’s, there’s 68 points, at least of integration with your quality and supply chain processes. Definitely, there’s no doubt about that. There are of course, some new topics like ESG that Terry mentioned, which are not really in the realm of the quality management system specifically. However, as we look towards what ISO did back in 2015, of creating this consistent structure for all of their management system standards, the intention is to encourage organizations to integrate their quality, environmental, occupational health and safety and other management systems. And ESG, of course, fits right in there with the environmental and even some of the social responsibility aspects as well. So, there was a few requirements that were added or say criteria added to MMOG/LE that we weren’t able to directly map across to IATF. But there was few you know, I’d say ESG was probably one of the main ones that came out. I do want to just like raise a flag here, about IATF 169 49. And I’m disappointed that here we are in 2023 and the IETF 16949 standard was initially released in 2016. And, yes, it is ongoing, supplemented, if you will, with sanctioned interpretations. But there’s a lot that’s happened since 2016. And part of the reason why the industry decided to move away from the ISO TS structure of the automotive quality standard being part of ISO to IATF 16949, fully controlled by the automotive industry was so that we could update the requirements to that standard on a more regular basis based on the changes that are happening in our industry, there’s so many changes that have been happening, yet we’ve not made an update, I’m hoping that in the next 12 months or less, that we actually see the same type of activity with IATF 16949 that we’re seeing with MMOG/LE that we recognize there’s a bunch of lessons learned coming out of COVID. But more so than that, just the changes that are happening, our industry electrification, etc, we need to be adjusting our Quality Management System standards to recognize those changes and further encourage alignment and integration with MMOG/LE and other industry standards.
Jan Griffiths: 21:10 I really, I like I love what you’re saying. But here I am thinking about somebody in a tier one level, right? Or maybe even tier two listening to this and going okay, so I got MMOG/LE, I’ve given that to my materials guy on my supply chain guy, right? I got IATF 16949. That’s my quality person, right? And now you’ve just told me that there’s 68 points of intersection. So, who’s responsible for that? How’s that work, what what have you seen as a success? You know, from maybe from your clients? I know, you work with a lot of clients in the automotive space. What have you seen? How do the,y how do they deal with this, Cathy, with the intersection with IATF?
Cathy Fisher: 21:52 It’s a great question. It’s breaking down the silos. This goes back to exactly what Terry and I have been talking about breaking down those silos between quality, supply chain, IT really all the functions across the organization. But we can start with quality and supply chain, because those are the two elements of customer satisfaction, quality and delivery. And so if those systems and processes are not working together, you have no hope of making your customer happy. It just you’re going to constantly be fighting that. So we need to be getting those functions of quality, the functions of supply chain, get other functions involved, but in particular, IT because there’s a need to adopt and embrace automation and a lot of these processes, and work together towards defining these processes for the business instead of being siloed. What we have seen in particular is with a number of the EV startups, they have the advantage of being in a greenfield situation where they’re able to structure their businesses not in a traditional way where they’ve got the quality manager, the supply chain, leader, et cetera. They’re looking at how they organize the work the processes of their business, much more from a value flow. And I’m not talking value stream on the shop floor and parking value flow across the supply chain. And as a result, they are able to define these processes in a more integrated fashion, and then, deploy them across the organization with the involvement of the necessary functional experts to execute those processes. And that makes it a lot easier to automate the processes as well.
Terry Onica: 23:25 The other thing we’ve seen, too, in when working with customers in the 24 essential supply chain processes is the value of getting IT involved. Because it often doesn’t understand these key processes. Like I said before, we find functions that are turned off in the ERP and they just don’t know what they don’t know, right that they need to do that. And then you take into consideration all the turnover we had. So another thing that was interesting Cathy and I spoke at an event and a CIO came up to me he was just panicked. He said, I’m brand new, I have no idea what somebody before me may have shut off in the system. And another thing we saw bit value in getting it involved is that we work with the life sciences organization. So, as is they took the automotive 24 essential supply chain processes. And what she told me back as she said, I realized in IT, I wasn’t even servicing supply chain. I wasn’t even thinking about them in the process. So, it gets these interesting discussions going between all three and there’s a lot of just quick and easy things that we have found that they can do immediately to rectify issues and to really streamline their processes.
Jan Griffiths: 24:35 Yeah, and I love what, going back to what Cathy said about the EV side of it, right? And the culture and the leadership in automotive is changing. We know that and EV startup companies, they don’t have this legacy organization structure, which is a benefit, but it’s also a detriment because they don’t have the legacy systems as in Terry, you know, the ERP systems, right? So how have you, Terry seen them adopt EV companies adopt more of the traditional ERP mindset in terms of just having a robust process?
Jan Griffiths: 25:12 Yeah, yeah.
Cathy Fisher: 25:12 Yeah. And one of the points that I want to make to that as well is, we are at a point in our industry, that the technology level on the vehicles that we’re producing, are basically computers on wheels, super computers, on wheels, if we really think about it. How can you manufacture a supercomputer on wheels, using green screens and Excel spreadsheets, please help me understand the congruence see there. It doesn’t exist. And not only is that you know, a false thinking in terms of the manufacturing operation, but the younger generation coming into our industry looks at that, and they’re like, I can do more on my cell phone, than I can out on my manufacturing job, or in my supply chain job, or my planning job or whatever. And so they’re not going to stick around, they’re gonna go to where there’s congruency between the level of technology of what they’re producing, and the processes that they’re using to produce that. And that’s what we’re seeing with the EV startups, they’ve got this great opportunity, this great advantage, to be able to start from scratch implement the level of technology that is in alignment with what we have available in the vehicles themselves, the state of the art, let’s put it that way. That’s available, no doubt for the legacy manufacturers, they need to choose to invest in that level of technology. And furthermore, to that point, I feel like we went backwards in the industry. And I know, Terry wants to ask me about automating quality management systems, I’m so happy to see MMOG/LE really emphasize, Hey, you want to be a player in automotive from a supply chain standpoint, you need to have an ERP system, it needs to be integrated into your operations. There’s one of the questions is like, there’s got to be a direct connection between your receiving process and your financial process. You know, that just makes sense from a governance standpoint, right? Why have we not mandated or required the use of technology from a quality management standpoint? Well, guess what it used to be there go back to QoS 9000. In the late 1990s, we required EDI, we required ASNs back in the 1990s. When we went to ISO ts 16949, that stuff was pulled out. Because ISO said, you can’t mandate technology, etc. Okay, I get that. But our industry can afford to sit in that thinking. If we are going to be the pioneers of manufacturing and technology globally, then we have to reflect that in our standards. So we need to be able to rely on the tools of automation that are available today, across not only our supply chain, but also our quality processes. And then that allows for that integration of those two factors in the business as well.Terry Onica: 25:12
What I think they’re doing is they’re implementing it properly from the beginning, because they don’t have that legacy going on. But what we do is we help to educate them. And we’ve worked with some EV startups on the automotive best practice, and they are so hungry to learn them, because they realize they’re deficient in that. So, they want to bring us in to say, let’s talk about these 24 processes and how we apply them. And learning from MMOG/LE and learning from IATF on the ability to be able to do that properly from the beginning. So, I see where they can have a real competitive advantage these startups because they can work with us understand that and then apply that right away and really leapfrog a lot of legacy things that we see at at traditional OEMs.
Terry Onica: 28:55 And, Cathy, to add to that, when we looked at the entire criteria for MMOG/LE and we do a mapping as to how can technology within the QAD product suite help you. 80% of the criteria could benefit by leveraging an automated QMS system. So oftentimes, we think QMS that’s just for those quality people. No, there is areas where it can help supply chain. So just one example the corrective action process would be great if your organization when you get a corrective action from your customer, you’re tracking in your system, how did you resolve it, you’re looking at what you did internally, or your suppliers have an issue. And you’re now putting that in an automated QMS system. So you can go back and you can track how many problems are giving you are they resolving them quickly? So, 80% really a QMS system. The point I really want to make is not just for quality. There’s a lot of benefits on the supply chain of using an automated QMS as well.
Cathy Fisher: 29:53 Yeah, and there’s solutions out there but unfortunately, the thinking and adopting automation from a quality management standpoint tends to be in pieces, oh, I’m gonna have a system for my document control, I’m gonna have a system for my corrective actions. And there may be minimal interaction between them, but they’re not, let’s say, deployed within organizations in a seamless manner so that you have that flow of information or data between quality supply chain and other essential functions of the business.
Jan Griffiths: 30:23 Yeah, you’re absolutely right. Cathy, you’re in a unique position. Because your clients ,you work with OEMs, you work with tier ones, and you’ve worked with startups, actually, both of you. But Cathy, from the quality intersection perspective, what advice would you give to companies out there? As they look at this and go, Oh, my gosh, MMOG/LE plus IATF Intersection? Where do I even start? What advice would you give Cathy, to either a CEO of a tier one or a supply chain leader? Tell us.
Cathy Fisher: 30:59 Well, for the CEO,the advice is, endeavor to break down the silos in your business. That’s it, there’s a strategy or almost a visionary piece to when we talk about money is made in the supply chain, not just on the shop floor, that has to start with the CEOs, the very top leadership with the organization, recognizing that their true value stream is the supply chain. That’s how they need to be strategically viewing the organization. And leveraging that strategic view to them prioritize the processes of supply chain, as essential to the business and then investing in making sure they’ve got people who understand those processes that documented the processes, where appropriate, they’ve automated the processes as well. For the Supply Chain Leaders, the place to start with, say more tactically, is with our 24 essential supply chain processes, because we’ve done the mapping, we’ve found the intersection for them. And there’s no mystery there, those processes are readily identifiable, and, you know, most organizations, so taking that list of 24 essential supply chain processes, reflecting on what currently exists in their organization, and working through those to make sure that those processes are clearly defined, documented, not just procedures, but also work instructions. They’ve got people who are trained to a level of competency, that they can then look for opportunities of automation of those processes over time.
Jan Griffiths: 32:28 Okay. And is that something that you do in your business? Do you help companies do that?
Cathy Fisher: 32:32 Absolutely. Yes, absolutely. That’s one of the key things that we’re doing. We’re we’re all about encouraging the integration. And it’s interesting when we talk to organizations about supply chain where we try and talk with the leadership, and especially the quality leaders in that they’re just like, we don’t want to deal with that. It’s too much with everything else that’s going on. But they’re standing in their own way to success. Because until we embrace that supply chain is the through line to cash, is the through line to making money in the business, they’re going to suffer, they’re going to constantly be reacting instead of being able to predict their future success.
Jan Griffiths: 33:11 And I love that that’s a quote, right there. Supply chain is the through line to cash. There it is that people would adopt that mantra, we’d be all set. Terry, what what’s your advice?
Terry Onica: 33:22 My advice is for the CEOs to stop viewing ERP and associated systems as a cost that they just painfully have to incur. If you look at the future, it’s all about understanding your data and your position, and how are you going to ever get to artificial intelligence, and the velocity and speed we need buy things in a spreadsheet, you’re never going to be able to sell those pieces together. And the other thing that I think they need to realize is these, this new generation does not want to work on green screens or black screens. And you’re going to really hamper your ability to draw people into your plant facilities to work and to keep them when they’re working on these manual processes. And I encourage every CEO to go to the CIO and ask them, When is the last time we’ve upgraded our planning system? Because I think they’ll find a lot had been out there for 15 years or more, they haven’t touched them at all, technology has advanced so much. And you’re missing all these opportunities to leverage the future way of IT and to transform data to have mean for your business. So I would really encourage them to get engaged in the systems.
Jan Griffiths: 34:36 Yeah, that’s great. And from a mindset perspective, you can wait until MMOG/LE version six, version seven, version eight, or for the next version of IATF, or for your OEM customer to come and hammer you over the head for it right. Or you could actually get ahead of the game. Right. And from what I’m hearing today, it’s about collaboration. It’s about breaking down silos and it’s about technology. It’s about taking a holistic view to your supply chain and it is all about speed. And that’s all we got time for today. Cathy, Terry, it’s been a pleasure.
Cathy Fisher: 35:11 Thanks so much, Jan.
Terry Onica: 35:13 Thank you, Jan.
Jan Griffiths: 35:17 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.
Download Cathy and Terry’s whitepaper, “Delivering on the Promise of Delivery,” Parts I and II, which examine all 24 processes in detail.
At the heart of The Prophets’ vision are “The 24 Essential Supply Chain Processes.” What are they? Find out, and see the future yourself. [ DOWNLOAD OUR WHITEPAPER ]
Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how.