Tech, Sustainability, & Talent: How Martinrea Is Building the Supply Chain of Tomorrow

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets podcast, and we are on a mission to bring you the latest insights and thought leaders leading the charge on supply chain transformation in our beloved automotive industry.

This podcast is powered by QAD and AIAG. I'm Jan Griffiths, your host and producer. Let's meet your co-hosts.

[00:00:27] Jim Liegghio: I'm Jim Liegghio from AIAG.

[00:00:29] Terry Onica: I'm Terry Onica from QAD. Let's dive in.

[00:00:36] Jan Griffiths: Hello, and welcome to another episode of the Auto Supply Chain Prophets Podcast. And my co-host, Terry Onica, is not with us today, but joining us is our new co-host, Jim Liegghio from AIAG. Hey, Jim, what have you been up to?

[00:00:52] Jim Liegghio: Jan, I signed a contract for fertilizing in my neighborhood for the HOA. I'm on the landscaping committee. And you know what that means, Jan? It means spring is going to come. Punxsutawney, Phil, whatever. I signed a landscaping contract for fertilizer. I say spring's coming. I'm wearing my green sweater today. I'm looking up.

[00:01:15] Jan Griffiths: I did not expect you to say that, but okay. All right. So, what else has kept you busy at AIAG?

[00:01:21] Jim Liegghio: Jan, obviously, the elephant in the room is the headlines. We can't get away from that. We see what's going on in the policy and information that's coming. Like drinking from a fire hose these days, right? So there's a lot of information. A lot to digest, obviously, with what's going on in the world. So, that's what we've been consuming and taking that forward to our membership.

[00:01:40] Jan Griffiths: Yeah. Jim, as I was glued to the TV this weekend and for our audience, we're recording this the week after the initial Trump tariff announcements, and I was glued to the TV much the same way as during COVID. Do you remember during COVID when we were anxious to know what was going on and what had changed, and it was the same kind of feeling, right? My stomach was in knots, and I was watching it, when is he going to announce it? What's happening? It's on, it's off. You know, it was just, wow. But here we are, and as I look back to my supply chain career, I got to say, Jim, I don't know about being in supply chain today in the auto industry; you have got to be ahead of the game. You have got to have your arms around so much. You've got to know what's going on with technology. You've got to know where to apply AI. You've got to understand sustainability. You have to put programs in place for sustainability. All of this, in addition to normal purchasing and supply chain operations. And if that isn't enough, you've also got to think about the talent pipeline. What are you doing to bring the right talent into supply chain? And that's why today I am thrilled to bring on the show a leader who is clearly ahead of all of these issues. And we're going to dive into them. And she is Megan Hunter. She is the Executive Vice President of Procurement and Supply Chain Operations at Martinrea International. Megan, welcome to the show.

[00:03:14] Megan Hunter: Thank you so much, Jan and Jim. It's a pleasure to be here.

[00:03:17] Jan Griffiths: Well, it is great to have you. Now, the first question on my mind, Megan, I gotta know, what are you doing about AI? Because so many people talk about it, it's on the news every single minute of the day. But as I think about it through the automotive supply chain lens, I'm not sure where I would start. Tell us about it.

[00:03:37] Megan Hunter: That's definitely a difficult question. So, you know, we are hearing a lot about AI, and we are starting to see it in different software that are available. One of the things that we wanted to do in Martinrea International is as we started looking at AI applications within the business, we wanted to make sure that we weren't siloed about our approach. So we formed an AI committee that is cross functional so that we can share different use cases company wide, and we can learn from each other. So I'm a member of the steering committee, and it's really interesting to see all of the different opportunities there are for AI across the company.

[00:04:25] Jan Griffiths: Yeah. Where do you start with supply chain, Megan? Can you share with us one of the AI applications in supply chain?

[00:04:31] Megan Hunter: So, one of the basic applications that I'm in love with these days is we have Microsoft 365 and embedded within Microsoft Edge is Copilot. And Copilot is like the best of both worlds. So, it combines ChatGPT-4 and web browsing. And you're going to say, "Okay, tell me more about this. Why are you so in love with it?" Well, let's say that you're going to do a search for suppliers. You want to find a supplier that can make a certain widget somewhere in the world. Using your traditional Google search, you could go 12 pages deep, and you have to open each company's website, look through it, try to understand what they make, and is it what you're looking for?

Well, Copilot just changed the game. You can go into Copilot and say, "Show me an IATF-certified manufacturer of this type of component anywhere in the world," and it will pop out a list of suppliers. It is so much faster, and yes, it has some inaccuracies, but the time savings is incredible. And that's just a very small example of how we use that in supply chain.

[00:05:55] Jim Liegghio: That is amazing. Megan, it takes the load off, like you said, of scouring individual potential suppliers and potential matches for what you're looking for. It does do some intelligent work for you, right? It's the purpose. What are the pitfalls? Let's just be honest. There are a couple of learning curve things going on with AI, and as people get into use cases and things, what would you suggest some of the pitfalls might be that people should be cognizant of?

[00:06:19] Megan Hunter: Well, I have had Copilot apologize to me for giving me inaccurate information. I was doing some analysis on some of the financials. I wanted to understand, for example, quality of earnings among our customers. And some of the information that it returned to me was inaccurate, and when I questioned it and said, "I see this." It would respond to me and say, "We're very sorry. We agree. It is that." So for things like looking for suppliers, you don't really have to worry about information coming back inaccurate, but if you're doing some kind of report and you really want to understand something very technical, you do have to be careful. But for researching, for enhanced writing, anything you have to write? Oh, it's amazing. You could drop bullet points in. You could say, "I need to write a letter doing this, this, and this," and boop, it'll just pop it out for you. And you could say, make it shorter or more professional or put it more in layman's terms. Make it more practical, whatever it is you tell it to do. It's amazing. And one of the things I like about it is some of these writing tasks are things that we dread. They're kind of those things that we tend to procrastinate. And so, having this little aid in the back of your pocket really helps liberate some people from tasks that they really dread doing.

[00:07:52] Jan Griffiths: Yeah, I remember in my days in program management, I hated doing the action item list. I can say that now, I could never say it when I was a program manager, but I hated it. I hated it because it was something you had to do after the meeting, and you had to pay attention in the meeting and make sure that you wrote everything down. And then there was this thing on your to-do list: send out the action item list, and I hated doing it. And now, I mean, almost all of us, I think, use AI to record meeting notes and summarize the meetings and the action items. It's a huge time saver.

[00:08:26] Jim Liegghio: So, you said that's the kind of the anti-procrastination medicine using AI for some of these simple tasks and some of these things that people find as a necessary evil. So, spreadsheets, let's talk about Excel spreadsheets. They're a necessary evil for a lot of businesses, a lot of roles, a lot of people, right? So, do you see any benefit for AI in terms of spreadsheets and getting things more dynamic and smarter with these types of things?

[00:08:48] Megan Hunter: I don't know how much AI is going to help us with, let's say, data that we maintain in a spreadsheet. For us, I think it's the need to pull certain data that we deem critical to the organization, pull it into our ERP system. And once that data is in a database, now you're able to develop more advanced tools with that data. So, my feeling is it's a good time to evaluate what kind of data do we really need as a company that isn't in our ERP system today? And most of the time, we're talking like qualifiers, the way we describe things, attaching a part number to a certain program, for example. These type of things, there may be a need to pull that into a database for future analysis.

[00:09:43] Jan Griffiths: I'm almost glad that Terry isn't here today because Terry's pet peeve is spreadsheets.

[00:09:49] Megan Hunter: Spreadsheets.

[00:09:50] Jan Griffiths: And making sure we have everything in the ERP system or in a database, and making sure that people aren't off and running their own little side spreadsheets. Do you have much of that going on at Martinrea, Megan? To be honest. Or have you managed to use your system and get the data integrated in a way that works for you?

[00:10:11] Megan Hunter: Wow, we still have spreadsheets. A 100%. We still have spreadsheets. I think we will always have spreadsheets, but what I will say is that over the past 10 years, we have been working strategically and methodically at pulling in data that we believe we need across the company into our ERP system, including qualifiers, and we've developed quite a nice, robust data set that has allowed us to do a lot of analytics, including for the tariffs, where we can slice and dice information in a matter of minutes, thanks to building some of these data-related tools.

[00:10:53] Jim Liegghio: Fantastic. Yeah, AI is relatively new. It's got some room to grow and a lot of these use cases I think will be implemented over time and the data gets more intelligence. Thanks very much, Megan, for sharing that.

[00:11:04] Jan Griffiths: There's quite a few companies out there, Megan, working in the procure-to-pay space and using AI. Have you done any work in that area?

[00:11:12] Megan Hunter: Actually, we have. We do have a P2P system that uses AI, and in its earlier years, it was using machine learning. And it basically acts as a buyer assistant, so it will recommend suppliers and it will recommend the price to source at. And what we learned in the early years through the incorporation of machine learning is that there were some pitfalls. So machine learning is reading those repetitive behaviors, and it can definitely learn bad behaviors. But with the addition of AI, that's somewhat changed in that we're not only relying on the actions that people take and learning from those, but we're also looking more broadly at what's of greater benefit.

[00:12:07] Jan Griffiths: So that's interesting, Megan. So, P2P, that's a definite opportunity. But like you say, just be mindful of the pitfalls and make sure that you're not building in bad behaviors into the process. As we look across the supply chain, Megan, we talk about the ability to map the supply chain and supply chain transparency, particularly now with tariffs. You've got to know where your suppliers are at, where the products are coming from, where they're being shipped to—a lot of data deep down through the chain. It's not just about your direct suppliers who are Tier One to you, but it's all the way down the chain. What are you doing in terms of SRM or supplier relationship management to map all this together?

[00:12:51] Megan Hunter: I think that is every supply chain professional's biggest dilemma at present. We've been working on an enhanced supplier portal, and the idea is to give us a 360-degree view of our suppliers. So, not only, you know, their performance, right? Their on-time delivery, their PPM scores, things like that, but also things like what certifications are they holding? Are they EDI compliant? How are they doing with sustainability? And then, getting into value stream mapping. Now, I would love to tell you that we're well on our way, but the reality is it's in its infancy. These whole resiliency topics that are the buzz in supply chain right now are very difficult. And I think this is going to require a massive cultural shift across the entire supply base because a lot of trust needs to be built between a supplier and its customer in order for a supplier to just be able to open up and reveal some of their supply chain data. So, I think we have a bit to go before we really start unlocking those doors.

There are some AI-related solutions that can predict some of the tiers down the supply chain. How accurate those are, how reliable those are, I think we're in the very early days, but those show some promise. Doesn't change the fact though that a major cultural shift is going to need to happen.

[00:14:35] Jan Griffiths: Yeah, I couldn't agree with you more. Trust is foundational to all of this happening.

[00:14:41] Jim Liegghio: Well, Megan, you touched on trust. You touched on reliability. You touched on communication and really the need for transparency through the tiers up to the customer, really. So, invoking flavors of sustainability here, right? That it's all about communication through the tiers, understanding your supply chain, like Jan said, where the products are sourced, where they're pulled out of the ground. We're getting into the sustainability topic here. Where do you see Martinrea's journey at present with sustainability and with working with your customers and your suppliers on enhancing these themes that you've talked about—reliability and trust?

[00:15:13] Megan Hunter: Absolutely. So, sustainability is part of our 10 principles. It's part of our vision and mission. It's part of our DNA, if you will, because we are a light weighting company. So, we've been working on sustainability issues for decades, we just didn't think of them as let's say, sustainability issues. Same thing with capital spend. We've been doing a lot of things to upgrade equipment, make them more efficient. We just weren't necessarily labeling them as such. So, I think the great thing about sustainability is it saves money. You use less, which saves you money. So, I think it's really an attractive initiative to every company out there. Here's some examples of how sustainability saves you money, especially through the supply chain. One is localized sourcing. We've all been talking about reshoring and localization. It's a priority for all companies these days. And when you look at reshoring and you think about what you've localized, looking at the transportation savings that were associated with it. Most people say, "Okay, we saved this much money." And in our case, I'll give you an example of one of these savings that was worth a million dollars. Instead of looking at it as a million dollars, which is great and one of the major KPIs for a supply chain team, you can also think about it in more relatable terms. So, for example, that $1 million equated to a reduction in 300,000 miles traveled, which is like driving coast to coast a hundred times. It saved enough carbon emissions to power 50 homes for a year. So, when we start to think about these things that we do every day, and we put them in more relatable terms, it really makes a big impact in our drive for sustainability because once you start to understand that's the difference you can make, it makes you hungry for more.

[00:17:40] Jim Liegghio: That's just incredible. That's, like you said, relatable. People can understand the impact of that move. Obviously, the money is one thing, right? Saving the money is huge, right? Like you said, it's been a KPI forever to save costs, but recognizing, let me say it this way, recognizing the benefit of the lessened carbon footprint, you know, and something like that is huge. You can measure that, and you can KPI that, you could scorecard that. That's a great example. What's next on the horizon, Megan, for sustainability in terms of your initiatives? How has Martinrea taken this to the next level, if you will?

[00:18:11] Megan Hunter: Well, let's talk about Zero Landfill. We're pretty passionate about working to reduce our landfills. And in Martinrea, we have a three-level certification program for each of our operating locations, kind of following along the Olympics theme. So, we have bronze, silver, and gold levels. And each one, of course, is progressively more difficult. Well, we are working with a plant who was trying really hard to get to the next level of Zero Landfill. And one of the issues they had was with mixed material containers, so wood pallets with cardboard attached. Dismantling these containers was very difficult, time-consuming, and also dangerous. So, it wasn't really something that we wanted to have our team members working on. As a result, it was really racking up our landfill. So, our packaging team, our logistics team, and our operations team got together, and they redesigned this container to be fully cardboard. Now, it's completely recyclable, and we've reduced our zero landfill. So, that's an example of something that just recently happened and that we're going to be driving even further.

[00:19:40] Jim Liegghio: Megan, thanks for sharing. Those are some great examples. Let's move into Scope 3 emissions. How are you doing working with suppliers on sustainability to collect data on the Scope 3 emissions?

[00:19:50] Megan Hunter: Yeah, that's another tough issue that supply chain teams have to work through. I think that when we look across the complexion of our supply base, there's a number of different understandings of what sustainability is. I think you see the very sophisticated companies that really understand and are driving the supply chain space in terms of superior performance with sustainability. And then you have the companies that maybe have heard about it but aren't really sure what that means to them. So, we thought, "Okay, let's start. We'll develop the sustainability survey. We'll send it out to all our suppliers, and we'll see where they're at." Well, it was very sobering when we saw the results come back because we learned that there is a need to develop our suppliers, to help them along the way—A, to understand, and then B, to help them develop along the way. And let's just take an easy example. Really, your baseline is where you start. You have to establish a baseline. And how do you establish a baseline? Well, the first thing you need to do is track your consumption—track your electricity, your natural gas, your propane, your water, so on and so forth. You need that baseline. And a lot of companies aren't there yet. So, Martinrea has been working with our companies, our supplier partners over the past year, and we've taken a really white glove approach. So, we took the top 10 percent and we've worked with them individually to get started on their sustainability path, if they're not there yet.

In the meantime, to satisfy some of the reporting obligations, we do a lot of estimating. This year, we were able to combine estimates with real feedback from the top 20 percent of our suppliers. So, I feel like we're going down the right path toward answering something that is very challenging.

[00:22:03] Jan Griffiths: Wow, Megan, you've covered a lot. There's a lot with AI, sustainability, SRM, and, of course, to make all of this happen, you need people. Now, we have just come out of a talent shortage; some would argue that we still have a talent shortage. What are you doing, Megan, to build your talent pipeline?

[00:22:25] Megan Hunter: That is a great question, Jan. We've recognized that people want to develop. Maybe not everyone strives to be in my seat someday, but at some level, they want to develop. They want to be the best at whatever they do. So, one of the things that we started formalizing was a supply chain job rotation program in our manufacturing plants. And I think that this has so many benefits. From a business perspective, of course, there's a natural contingency. If someone goes on holiday or something like that, there's another person in the department that understands the role and can pitch in. But, it's so much more than that. By rotating positions, people get the opportunity to have a different vantage point, a different perspective. They see what it's like walking in the shoes of someone else and what their pain points are. And they start to see the bigger picture and how their role can help improve someone else's role. So, that bigger view makes them better in their current role. And it's really been well received by many of our plants who have started this. In addition, one of the things that I found just crazy, quite frankly, is that there aren't any supply chain apprenticeship programs—at least none that we could find. Formal ones. And so we set out to start our own, and we have a team of people who are working on developing that apprenticeship program with one of the local universities. And we're going to be really excited to launch this here in the coming months because this will provide us a great pipeline to future talent. When we can start them early in the process, take some of our people who are operators showing a lot of promise and potential for the future, and we will be able to develop them to be great supply chain professionals through this apprenticeship program.

[00:24:44] Jim Liegghio: I love the fact that you're building an apprenticeship program—people that have sweat equity, and getting into the role, and learning the role from the ground up, and shadowing folks out there in the field.

Obviously, we talked about the need for resiliency with what's going on right now and all the challenges. Ideally, these folks have that grit factor—like we say here in Detroit—and have that kind of dig your heels in, roll your sleeves up, and get your hands dirty kind of thing going on. So, I really love that. And I wish you all the success in the world on that. I think that it is so important, like you said, to ensure the sustainability of the business and the talent pipeline and just give folks real-world experience solving problems. I think it takes a special character to do that—to put on that type of program—but also the recruits for that type of program. Fantastic.

[00:25:25] Jan Griffiths: Yeah. Okay, Megan, to close us out today, share with us one action that you would recommend that leaders in supply chain, in the automotive supply chain, take right now to prepare for the future. And that could be anything—it could be in the field of talent, sustainability, data, AI—one thing. Based on all of the things you're doing and the lessons learned that you've gleaned along the way, one thing, one action supply chain leaders should take right now—what would that be?

[00:25:59] Megan Hunter: My favorite action—and quite frankly, I think it's the most impactful—is to look for quick wins. Sometimes, these new initiatives can seem so overwhelming and so complicated, such a monumental change. But if we look for the, what’s something we could do today? What could we do now? What's the natural first step? —I think when we focus on those quick wins, we start moving the needle fast. It takes away the overwhelm and the burden from some of these things and focuses on the action—the get it done.

So that would be my advice: look for the quick wins.

[00:26:43] Jim Liegghio: What a beautiful way to end. Megan, thank you so much for joining us today.

[00:26:47] Megan Hunter: Thank you for having me. It's been a lot of fun.

[00:26:50] Jim Liegghio: Megan, it's been a true pleasure hearing you today and learning more about what Martinrea is doing out there. And, just like you said—quick wins—I love that. I think our listeners can really appreciate that in this climate. We very much appreciate your time today.

[00:27:02] Jan Griffiths: We love to hear from our listeners! Reach out to any one of us—our contact information is in the show notes. And if you want to dive deeper into our content, check out our website at AutoSupplyChainProphets.com.