Moving Parts: A Framework for Improving Automotive Supply Chain Performance
Without context, strategy, and systems, the current automotive supply chain can seem like a complex web of disjointed parts. Combine that with the pressure to deliver on the promise of delivery and you have a recipe for disorder, bottlenecks, confusion, and frustration.
Fortunately for OEMs everywhere, Cathy Fisher, Founder and President of automotive systems firm Quistem, and Terry Onica, who directs vertical solution strategy for enterprise resource planner (ERP) and supply chain solution provider QAD, dove deep into ITF 16949 and MMOG/LE. Their goal — to unearth and demystify the workings and management of the auto supply chain machinery — resulted in an easy-to-implement framework that integrates and summarizes the two sets of professional standards and guidelines.
In this episode of Auto Supply Chain Prophets, co-host Jan Griffiths talks with Cathy and Terry about their findings and how they used them to identify 24 processes that are essential to the automotive supply chain, creating a five-step, easy-to-follow roadmap to optimize supply chain performance.
Themes discussed in this episode:
- How a simple roadmap can make the seeming complexity of the automotive supply chain a lot more manageable and improve performance.
- The value for an organization of identifying its 24 essential processes in making good on the promise of delivery.
- How, without context and careful application, investing in IT solutions can cost time and money instead of saving them.
- The extremely valuable (but often under-utilized) employee who’s been with the company for decades and knows its systems and processes inside and out.
- The necessity of a seat at the C-suite table for supply chain leaders.
Featured on this Episode
Name: Cathy Fisher
Title: Founder and President, Quistem
About: Cathy’s firm helps its clients, particularly automotive clients, 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.
Name: Jan Griffiths
Title: President and Founder, Gravitas Detroit
About: A veteran executive in the automotive industry, Jan previously served as chief procurement officer for a $3 billion, Tier 1 global automotive supplier. As the president of Gravitas Detroit, Jan provides online courses, speeches, podcasts and workshops to break the mold of command and control leadership to help you unleash the potential of your team and allow authentic leadership to thrive!
Timestamped inflection points from the show
[2:19] Twenty-four processes, five steps: Cathy Fisher and Terry Onica identified 24 essential supply chain processes and mapped out five steps (click to download whirepaper) to help OEMs deliver on the promise of delivery. Their roadmap begins with recognizing what the essential processes are within a particular organization.
[3:11] Beyond recognition: Once a manufacturer identifies the essential processes they need to assess their organization’s level of competency to manage those processes (Step 2), train them where they fall short (Step 3), and then focus strategically on supply chain to make sure they have the right resources and teams in place to manage these essential processes as a system and improve overall performance.
[4:13] Putting it all together: Having the plant manager, supply chain manager, quality manager and IT manager join forces and figure out how to integrate and automate all their essential processes is critical to making Cathy and Terry’s system work.
[6:00] The wisdom of years: Especially considering workforce shortages, it’s important to find the remaining veterans who have worked with the organization’s systems for years and can impart that knowledge to current, newer employees, before they retire.
[7:39] Standard derivation: You could say the “DNA” of Cathy and Terry’s 24 essential processes is a combination of the standards set forth in IATF 16949 (the International Standard for Automotive Quality Management Systems) and MMOG/LE (Materials Management Operations Guideline/Logistics Evaluation), both of which outline best practices for the automotive supply chain.
[10:35] From theory to practice: To be sustainable, organizations need to implement the 24 essential supply chain processes, and to do that they need to focus strategically on supply chain with the aid of technology. Giving supply chain leaders a seat at C-suite tables is crucial to making this happen.
[12:07] Look before you leap: Often companies invest in technology without thoroughly assessing the supply chain processes they’re trying to automate and learning how specific technologies could be applied to facilitate them. Supply chain leaders should reach out to their ERP organization to ask about functionality before rushing to apply an IT solution they don’t fully understand.
[16:42] Streamline your systems. Don’t reinvent the wheel: To Cathy and Terry, perhaps just as important as making their essential processes and roadmap comprehensive was making their solution intuitive and easy for companies to use.
[17:21] The power of systems analysis: By identifying an issue with supplier performance and learning how to use their existing technology more effectively, a customer of Terry’s was able to reduce monthly purchase orders from 100 to five and save $400,000 in inventory.
[18:20] Context is the key: Automation is powerful, but often companies will implement a solution without understanding the dynamics of how it will interact with their organization’s processes. When they take the time to study this they can leverage it to save money and time.
[18:45] The one thing: If you’re a supply chain leader and you want to improve your ability to deliver on the promise of delivery, the hard work has already been done for you. Take the roadmap, take the 24 processes, and off you go. (click here to access the documents)
[2:53] Cathy: “We've lost many people inside of the automotive supply chain over the past several decades, and so a lot of that institutional knowledge has gone away and we see this as one of the reasons why organizations are struggling so much to maintain delivering on the promise of delivery.”
[4:12] Terry “What we find is really key is bringing the plant manager, the supply chain manager, the quality manager and the IT manager together to look at these processes.”
[5:28] Jan: “As I look back at my time in supply chain, there was always that guy, that one guy who just knew everything about the system, and he'd been there for decades. Everybody went to him for advice. Those kinds of people are extremely valuable, and usually, they're not appreciated as much as they should be.”
[6:50] Cathy: “We can speak to automating or adding technology to improve individual processes, but if we're not looking at those processes holistically, and where they connect to each other and developing a system that connects those processes together from a technology standpoint, then you're not going to have the visibility of what's happening in your supply chain. [Instead] you’ll have a lot of disagreement inside the organization about what strategically are the right steps to take to manage, whether it be supply chain disruptions or opportunities to grow.”
[10:56] Cathy: “For many organizations, there's no supply chain seat at the C-suite table, and that's really one of the key points that has to change in order for automotive suppliers to be successful, not only delivering on the promise of delivery today but being able to be sustainable in the future against organizations like Amazon.”
[13:18] Terry: “When we work with organizations, tiered suppliers sometimes don't even have the knowledge of the existing system. Reach out to your ERP and organization ask about the functionality there, because oftentimes people are on very old ERP. They should be on more current ERP, so they don't understand that it's even there to be able to address what they need.”
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:
Hello, and welcome to another episode of Auto Supply Chain Prophets. And today, we're gonna dive deeper into delivering on the promise of delivery. Sounds great, right? But in reality, not so easy to make that happen in the automotive supply chain. And I can tell you from my experience. I always wished that there would be just one simple roadmap to follow. We all know there are so many aspects of the business that impact the ability to deliver on the promise of delivery. What is this roadmap that could help us get there? Today, you're going to find out all about that roadmap. So let's dive right in. Cathy Fisher, tell us about this five step roadmap, and what is the history, the background behind it?Cathy Fisher:
Thank you, Jan, we identified these five steps that make up our roadmap to delivering on the promise of delivery, as a result of research that we were doing to understand why our suppliers suffering poor delivery performance to their automotive customers. That trend has been going on for minus a decade or decades even. And as we started to really dig into our research, we found fundamentally organizations were missing a supply chain management system per se, really identifying and managing the processes that can support delivering on the promise of delivery.Jan Griffiths:
Let's go deeper. Cathy, what are the five steps?Cathy Fisher:
The five steps that we've mapped out to help organizations deliver on the promise of delivery, start with identifying their essential supply chain processes, and we've given them some help on that with the 24 essential supply chain processes that we identified through our research and working with many organizations across the automotive supply chain to recognize what is behind their delivery performance issues. Now, it's not just about recognizing the processes, there's also about developing competency within the organization to manage those processes. And as you know, we've lost many people inside of the automotive supply chain over the past several decades. And so a lot of that institutional knowledge has gone away. And we see this is one of the reasons why organizations are struggling so much to maintain delivering on the promise of delivery. And so steps two and three are related to each other. And step two, we're encouraging organizations to assess the competence of supply chain knowledge and abilities within their organization relative to the applicable supply chain processes. And then from there, fill the gaps. In other words, get some training for their team members and across the organization to the functional areas that are going to support the supply chain activities necessary to deliver on the promise of delivery. The fourth step is really about organizations looking strategically at supply chain, to make sure that they have the resources in place and the team in place in order to manage those processes systematically and improve delivery performance from that perspective. Terry, I'm gonna let you talk about step five, because you're the expert on this one.Terry Onica:
Yes, step five is really important. And so Cathy and I, based on a lot of assessments that we've done with automotive suppliers around the 24 essential supply chain processes, what we find is really key is bringing the plant manager, the supply chain manager, the quality manager, and the IT manager together to look at these processes. But what's the most important is first that you look at the process, right? Where are the improvements and Cathy and I always say pick your three from the 24. We also give that outside perspective when we're working with the suppliers to say what is best practice based on our knowledge of IATF 16949 and M M O G L E: the materials, management, operations, guideline, logistics, evaluation, which is a supply chain assessment, and really digging into those processes. And we're always amazed at what we find. But one of the key things in the discussion is where's the data out? And sometimes we find that they don't need and understand the data is available in their current ERP system. But then once we discuss that, what's the best process? How do we then apply that to it? So processes always first and foremost. And then applying the automation, the technology is just a logical next step. And now you know that your processes are based in your system, and with the technology to make sure that everything is streamlined and working properly.Jan Griffiths:
Yeah, one thing you know, Terry, as I look back, at my time is supply chain, there was always that guy, right? It was always that one guy who just knew everything about the system. And he'd been there for decades. And everybody went to him for advice. And, you know, those those kinds of people are I mean, they're extremely valuable, right. And usually, they're not appreciated as much as they should be. But I think it's about you got to get inside their head, you got to get that knowledge out. And you have to have a defined process, right?Terry Onica:
Absolutely, you have to get that knowledge out of their head. And it's critical today with all the workforce shortages. Cathy and I, see that that's a problem today is because processes and work instructions weren't documented that people don't even realize there's the capability in the system to even handle it, which is even more difficult for organizations. And so we often find that we have to go back and say, you know, we got to go get with your ERP provider, that functionality is there, but that knowledge erosion, people start going back and using spreadsheets or making up their own processes are kind of going rogue. So you know, once you get that knowledgeable person, you have got to get that documented in the minds of the organization, so that everybody can see that should that person leave.Cathy Fisher:
Yet, it's really about connecting the processes together systematically as well. We can speak to automating or adding technology to improve individual processes. But if we're not looking at those processes holistically and where they connect to each other, and developing a system that connects those processes together from a technology standpoint, then you're not going to have the visibility of what's happening in your supply chain. But you're going to have a lot of disagreement inside the organization about what strategically are the right steps to take to manage whether it be supply chain disruptions or opportunities to grow.Jan Griffiths:
Tell us about steps two and three around this competency assessment and training.Terry Onica:
Back to our 24 essential supply chain processes, the organization needs to look at those. And it's critical because it brings you back to the basics of supply chain. So when Cathy and I put these together based on MMOGLE and IETF we looked at the intersection and those key most critical points to go back to the basics. Once you look at those as an organization with quality supply chain, IT and the plant manager, then it's critical to do two things: one, to identify the gaps, like we said in your processes, but two, to go back and identify the gaps in the skill sets. Like we just talked about with knowledge is to make sure does everybody understand that if they don't understand those processes, then we need to get people quickly trained. We find today there's so many new people at these plants, and they don't even have automotive experience. So once you identify those gaps, then now we need to go in and fill in those gaps and get them educated. AIAG is looking at developing some training based on our 24 essential supply chain processes. We should be able to hear more about that later this year. But what I'd like to talk to about to or have Cathy talk about is what she's doing with her organization.Cathy Fisher:
Earlier this year, Quistem launched a program, it is a training program to help organizations look into their existing supply chain management systems based on those 24 central supply chain topics and recognize what currently exists the let's say maturity and robustness of their supply chain processes, and then strategically identify where there's gaps that need to be filled, as well as where the opportunity for technology can really accelerate those processes towards delivering on the promise of delivery. Through that engagement through that the Quistem is delivering on the promise of delivery training. We're not only helping organizations see where they stand from a state of supply chain standpoint, but at the same time, we're also educating the key individuals within the organization that are going to carry that supply chain management system forward.Terry Onica:
The AIAG training, what it's going to do is just cover the basics, get people up to date on what those processes are. Cathy's will be a logical follow on to dig deeper in the organization to really look at those processes. So that's the difference between the two trainings.Jan Griffiths:
What's the relationship between the 24 steps and the five step roadmap?Cathy Fisher:
So the 24 essential so Supply Chain processes are what Terry and I have identified through our research are the critical, I'm gonna say foundational supply chain management processes in order for organizations to deliver on the promise of delivery. And actually, we started with those 24 essential supply chain processes discovering those, through our research of comparing the IETF 16949 standard with MMOGLE, and our experience working with our automotive suppliers and seeing how they were struggling to address delivery performance issues with their customers. After recognizing those 24 essential supply chain processes, Terry and I realized we need some way to enable organizations to implement those 24 central supply chain processes, and really change the thinking inside of the organization to be a lot more strategically focused on supply chain. And we've talked before about the fact that for many organizations, there's no supply chain seat at the C suite table. And that's really one of the key points that has to change in order for automotive suppliers to be successful. Not only delivering on the promise of delivery today, but being able to be sustainable in the future.Jan Griffiths:
Very good. The fifth step in the roadmap is about technology. Why is this step last? Any logic behind that?Terry Onica:
Again, we really think you have to sit down with the plant manager quality, IT and supply chain and look at those 24 topics together as a whole. So once you've got those processes defined, you've got your work instructions in place, you know, where are the data should be? And do I have a place to put the data? And what processes might I leverage in my IT system, then you can really start to automate that process to give you more real time visibility. To give you more actionable data. It's just amazing how we see that customers can see so many things once everything is in a system and it's automated to best practice.Cathy Fisher:
Yet, we've also noticed that organizations tend to jump feet first into investing into technology, especially around supply chain without first understanding what are the processes that they're really trying to automate? And how do those processes connect with each other. And this is where we've seen over decades, that organizations invest in different systems that are not connected to each other. And they're using Excel spreadsheets to transfer information from one system to the next. Or if those systems are not functioning in a way that's consistent with how their operations are performing, then they're forced to go outside of the system to manage key information of their supply chain.Jan Griffiths:
I can't tell you how many times I've seen that in my career. People get excited from an IT perspective, or somebody sells them on a solution. And they're there say yeah, this is great, we're going to implement this. And then they're on some kind of expedited timeline. And off they go without going through the basics. And that's what this is all about. It's going back to basics, understanding some of the core basic business processes before you rush to apply an IT solution, right?Terry Onica:
When we work with organizations, tiered suppliers, they sometimes don't even have the knowledge of the existing system. Reach out to your ERP organization asked about the functionality there. Because oftentimes, people are on very old ERP, which they should be on more current ERP. So they don't understand that it's even there to be able to address what they need. So we find that that is so helpful to get bring them in because we find things like capabilities Shut up, because somebody prior didn't understand how important that was.Cathy Fisher:
Relative to technology. I've personally seen over the time that I've been in the industry almost 40 years now that there's a tendency when we don't really understand process or processes that we need to accomplish inside of our organization to grasp at whatever technology solutions are out there thinking that those are going to magically solve the problem. I'm thinking about FMEA right off the top of my head, a lot of organizations that don't really understand doing failure modes effects analysis will go out and buy a software solution thinking that that's magically going to solve their problem. But that's only a tool to manage the business. And it's the same thing when it comes to supply chain. If you don't understand your supply chain processes, and you're just buying a technology solution, it's not going to work for you because you're not going to understand this application who needs to be involved, and what are the true activities that are necessary in order to deliver on the promise of delivery.Jan Griffiths:
You know, as I'm listening to this conversation evolve, I'm putting myself back in that supply chain role for a moment, right. Where does somebody start Cathy, where does the supply chain leader start? I mean, we've got these great documents, the five steps, the 24 processes. But where do they start?Cathy Fisher:
That's actually why our first step in the roadmap is identifying your essential supply chain processes. Now, Terry and I have given you all the start by identifying the 24 essential supply chain processes that we discovered through that analysis of the IETF 16949, MMOGLE what we call the intersection of supply chain and quality. And we have vetted those 24 essential supply chain processes with many organizations throughout the automotive supply chain. But it really comes down to organizations looking at their own supply chain processes and recognizing what are those supply chain processes that are critical to their organization being able to deliver on the promise of delivery? And from that point, then they can figure out where's my competency gaps? How do I establish a strategy in my organization around supply chain, and then look to technology to automate those processes?Jan Griffiths:
Good. It seems to me like you've done a lot of the hard hard work of taking these specifications, understanding how they relate to each other, taking your experience in the industry, with clients, your own personal experience, putting that all together and distilling that down into something that's relatable, that's easy to understand. And most importantly, it's actionable. And I think that you've done this a great job of boiling it all down. So somebody can just take these two documents, and and off they go. Is that a fair statement?Cathy Fisher:
Absolutely. We want to make supply chain intuitive and easy for organizations. And you know, we've talked about previously were a big motivation personally, for me is I've experienced the quality transformation that's happened in the automotive industry over the past 40-50 years, in general. And it's really that simple as understanding what are the processes that are essential to getting the results that your customers expect, and that are going to sustain the success of your organization going forward. So that's what we're trying to do over here from the supply chain side is elevate supply chain to that same level of industry excellence.Terry Onica:
One thing I want to add is give you a real-life case study of what can happen when you do this. So working with a customer to identify an issue with their supplier performance, they didn't know how to use the system. So she was doing 100 purchase orders a month. When we implemented scheduled orders, she only really needed to do five purchase orders and hit a button to make everything the demand go out to the supplier. So imagine her time savings on that their inventory, you know, turns went really high. Their suppliers loved the fact that not only they were getting the scheduled orders, but they're getting via EDI and web, this plant saved 400k in inventory. Now, if you don't sit down and look at your processes, you can miss these kinds of savings.Cathy Fisher:
Yeah, and Terry, what you're talking to is exactly what we see time and time again, that organizations don't understand how their processes need to function in order to deliver on the promise of delivery. So they'll take a solution. And they'll just apply the solution as it is without understanding what that solution needs to be doing specifically for their organization. And leveraging the benefits of automation that can give you those time savings, as well as cost savings inside of your business.Jan Griffiths:
And as we always like to say money's made in the supply chain. And if you're a supply chain leader out there right now and you want to improve your ability to deliver on the promise of delivery. All the hard work has been done, take the roadmap, take the 24 processes, and off you go and you can find them we put a nice easy link in the show notes. Cathy, Terry, it's been great talking to you again.Cathy Fisher:
Thank you, Jan.Terry Onica:
Thank you, Jan.Dietrich:
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.