How to Become an A-Class Supplier Using the Best Business Practices Described in the Global Logistics Standard MMOG/LE
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1 How to Become an A-Class Supplier Using the Best Business Practices Described in the Global Logistics Standard MMOG/LE M2M d.o.o. Slovenia Jože Novinšek, CEO
2 Agenda The challenge The results The road to success - Implementing the best business practices defined in the global logistic standard MMOG/LE How Zastava Tapacirnica fulfils the key customer requirements: - Communication with customer - EDI and ERP integration - Capacity planning - Tracking the materials - Ensuring the correct data in ASN-s - Communication with suppliers The message to the manufacturing companies
3 Zastava Tapacirnica Dominant part of production are automotive interiors. With tradition of over 150 years, Zastava Tapacirnica supplies to many leading seat suppliers, and the final products are found in the top automotive brands, like: - Opel, - Renault, - Peugeot, - VW, - SEAT - BMW. The new 8000 m 2 plant in Kragujevac, Serbia, was built with respect to the top industry standards. New plant is just 1 km away from the Fiat Serbia main assembly plant, and 20 km from highway E5.
4 The Challenge Until 2007, Zastava Tapacirnica was the subsupplier of JCI-NTU (Slovenia). With ambition to evolve, in 2007 the company set ambitious goals: - To become JCI s Full Service Supplier - To become a global A-class supplier - To get new customers within JCI, and new ones - To achieve better business results - To achieve steady and permanent growth
5 The Results All goals were met! - Full Service Supplier from June, A-Class Supplier de facto from 2009, formally from June, 2010 audited by JCI - Signed contracts with a significant number of new customers - Business results are good, and economic crisis left relatively few scars - The growth of the company is permanent and stable
6 The Road To Success Implementation of the best business practices defined by the global logistic standard MMOG/LE: - Implementation of the proven and reliable ERP system - EDI and ERP integration to enable automatic communication & planning with customers and suppliers - Bar Code implementation total control over the flow of materials and products - Continuous Improvement based on the MMOG/LE Gap analysis MMOG/LE Global logistic standard. - Describes industry s best business practices. - Coordinated and edited by AIAG i Odette: MMOG: Material Management Operations Guidelines LE: Logistics Evaluation
7 What is Global MMOG/LE Recommended standard for materials and logistics Self-assessment tool for identifying gaps in processes Based on agreed business processes - By OEMs and suppliers Ford, Chrysler, PSA, Renault, Volvo Car, Volvo Truck, etc. Based on extensive, best practices - 6 chapters criteria Determine current level of plant performance
8 MMOG/LE Customer s Requests * TOP PROCESS MAP In Serbian Language Capacity Planning Accurate Data in ASNs Tracking materials in production EDI & ERP Integration Sub-supplier Communication
9 Request 1: EDI & ERP Integration The organization has the capability to electronically receive delivery forecasts and requirements via traditional EDI or web-based tools. Why? Electronic transfer of data eliminates manual data entry errors and increases efficiency by conveying schedule information more quickly through the supply chain, thus reducing reaction time and cost. The reduction of administrative tasks (e.g. re-keying customer schedules) allows resources to be more productive by working on other value-added activities. Criteria F3 The organization has the capability to automatically integrate delivery forecasts (e.g. 830/DELFOR/planning releases) into the planning system, when available electronically from the customer. The automatic integration includes all sites involved in the manufacturing and shipping process to the customer, including warehousing and 3rd party facilities. F3 The organization has the capability to automatically integrate delivery requirements (e.g. 862/DELJIT/shipping schedules, 866/DELJIT/sequenced shipping schedules) into the planning system, when available electronically from the customer. The automatic integration includes all sites involved in the manufacturing and shipping process to the customer, including warehousing and 3rd party facilities.
10 EDI & ERP Integration The Customer Call-of and Forecast Receiving Process 1. Original EDI Call-Off and Forecast received from Customer 2. Mapping and Automatic Load into ERP System 3. Exact Data Input to Planning Process (MRP II)
11 Request 2: Capacity Planning Why? The organization shall perform a comparison of its resources against the customer's short-, medium-, and long-term requirements for both production and service parts. A process shall be in place that ensures prompt communication to the customer of any risk that could affect their operations. A major goal of the planning system is to review customer requirements far enough in advance to detect potential problems in meeting the demand for both production and service parts. This process must occur in a timeframe that allows for corrective action and minimizes the impact to the customer. Criteria: F3 F3 Comparison of resources versus customer requirements shall be reviewed upon receipt of forecast requirements (e.g. 830/DELFOR/planning release), comparing every week of the forecast sent by customers. Capacity planning volumes negotiated with the customer shall also be incorporated in the capacity planning process. Resources versus customer requirements shall be reviewed upon receipt of shipping requirements (e.g. 862/DELJIT/shipping schedules, 866/DELJIT/sequenced shipping schedules), comparing daily ship requirement sent by customers. F3 There shall be a process in place to notify customers of any significant resource limitations in meeting the requirements.
12 Capacity Planning Process Q & A: MPS: What and When we have to produce? MRP: Shall we receive the required materials on time? RCCP: Do we have enough capacities to produce ordered and forecasted? Input: Orders, Forecasts; Inventory, Goods in Transit; Lead Times; Technology; Resources
13 Capacity Planning MPS: What, when, and how many we have to produce? Gross Requirements Master Production Schedule Planning Periods Projected Quantity On Hand Cumulative Quantity On Hand Available to Promise
14 Capacity Planning MRP: Which materials, how many, and when we need for production? Shall we receive them on time? If the Projected Quantity On Hand is negative we may have a supply problem. If this is true, and we can t solve the problem we have to alert the customer. Warning! Release the purchase order.
15 Capacity Planning RCCP: Do we have enough resources to produce ordered and forecasted? Resource capacity per period (day) : 920 hrs. Overload on 23-Jul-10, but cumulative capacity is positive, from previous days under load. We have enough capacity within period we ll start production earlier. Total resource load. On 27-Jul-10, the cumulative capacity is negative. Re-plan of production, or increase of capacity is necessary......or alert the customer, that we aren t able to produce on time.
16 Request 3: Tracking the Materials Why? The organization shall have a process in place to ensure all material is labeled accurately and identified clearly at all stages in the supply chain. Material that is properly identified reduces the risk of misplaced material, delays, and/or production disruptions. Criteria F3 The organization shall have a process in place to correctly identify all material from the point of receipt to final shipment, including direct marking when needed. F3 The organization shall have a process in place to ensure part's labels are available at the appropriate time and are applied correctly. F3 The organization shall have a process in place to accurately and clearly identify all storage locations (e.g. signage, rack labels). F3 The organization shall have a process in place to ensure the appropriate identification of all unusable or damaged material (e.g. scrap, returns, rejections).
17 Tracking the Materials Receiving Materials Scanning the Supplier Labels
18 Tracking the Materials Receiving and Labeling the Materials 1.-Supplier Label 2.-Using bar code to enter receipt 3.-Internal label print to track material in process
19 Tracking the Materials Material Issue By FIFO System generates FIFO picking instructions. Bar code enables recording the exact material issues by serial numbers.
20 Tracking the Materials Receipt From Production Products are tagged with internal bar code labels and than stored.
21 Request 4: Ensuring Accurate Data in ASNs (Advanced Shipment Notice) Why? The organization shall have a process to ensure transport documents are completed according to customer, industry and government/international standards. Additionally, Advanced Shipping Notices (ASNs) are accurate and transmitted in a timely manner. Accurate and timely documentation helps to avoid delays and extraordinary costs in the transportation of material, including any potential supply chain security and/or customs issues. ASNs transmit information required by the customer so they are aware of shipments that are in transit and can plan accordingly. Criteria F3 F3 F3 The shipping label shall be reconciled against the customer ship requirements. The data content of the shipping labels shall be verified at the last possible point in the shipping process, such as RFID or scanning, to ensure consistency between container content, labels, and documentation. The organization shall ensure that the data content of all ASNs is complete, accurate and processed in accordance with customer requirements. When master labels are used, individual container labels shall be reconciled to master labels. All shipments, including documentation and labeling, shall be prepared to customer, industry, and government/international standards and requirements (e.g. customs handling, C-TPAT, PIP, AEO) including carrier routings. F3 The shipment process shall ensure that each ASN is transmitted at the time of conveyance departure.
22 Ensuring Accurate Data in ASNs Shipping Process First step is printing the shipping schedule based on the customer schedule.
23 Ensuring Accurate Data in ASNs Labeling and Controlling 1.-Shipping schedule and internal product labels are used to pick the goods. 2.-VDA labels are printed, attached to boxes and controlled in real time.
24 Ensuring Accurate Data in ASN Sending ASN 1.-Shipper is printed. 2.-Redundant label controls are possible. 3.-The truck left the plant. At this point the ASN is sent.
25 Request 5: Sub-Supplier Communication A process for electronic data exchange shall be in place with suppliers, sub-contractors and logistics providers. Why? Fast, reliable, and integrated exchange of data significantly improves accuracy, flow, and visibility of information and reduces lead times, administration, and costs. The real-time, automatic exchange of information allows the organization and its suppliers, sub-contractors, and service providers to respond more quickly by having greater visibility and thus reduce inventory. Criteria F3 The organization exchanges electronically relevant materials and logistics information (e.g. planning release, delivery schedules, ASNs) with suppliers, sub-contractors, and service providers. Traditional EDI or web-based solutions are acceptable means of electronic communication; and fax are not acceptable means of electronic communication. Traditional EDI data shall use an industry standard, non proprietary format. Web-based solutions shall be in compliance with customer requirements. F3 The extent to which traditional EDI or web-based solutions is used with sub-suppliers is in compliance with customer requirements (e.g. all sub-suppliers, critical commodities, purchase value, part volume).
26 Sub-Supplier Communication Process Purchasing requirements are reported based on MRPII nett requirements. Purchase order can be manually amended.
27 Sub-Supplier Communication Sending PO and Receiving ASN 1.-PO was confirmed 2.-PO is sent to supplier using EDI or Web EDI 3.-Supplier sends ASN-s, goods are properly labeled
28 Sub-supplier Performance Rating - Process System automatically and objectively rates the subsupplier performance based on predefined performance measures.
29 Vision: Continuous Improvement What can be done to become even better? Periodical self assessments using MMOG/LE Results are gap analysis telling us where opportunities for improvements are. Based on gap analysis opportunities: Define actions how to improve Priorities Teams Costs Benefits Use MMOG/LE as the main continuous improvement tool.
30 The Message to the Companies What should the companies do? Wait for the customer request to comply? Be proactive! Use the best business practices to improve now! The customers does not always promote compliancy with MMOG/LE! Why? To have a Slave supplier To recognize less overhead costs lower prices To keep the jobs (transport, warehouse, purchasing) To be able to cut the contract easier and more
31 Benefits AIAG and Odette MMOG/LE Survey Ability to meet ISO TS Ability to keep existing business Ability to get new business Data accuracy Ability to support lean (Tier 1) Overall supplier rating (Tier 2-3) Inventory Control Less data entry Presentation available!
32 Thank You! Copyright by M2M d.o.o Jože Novinšek, CEO jno@m2m-is.si Send me an for presentations! 32
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