Materials Management Operations
Guideline/Logistics Evaluation
November 2007
1

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Why MMOG/LE?
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What is MMOG/LE?
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Completing the Self-Assessment
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Who is Requiring MMOG/LE?
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MMOG/LE Key Criteria
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AIAG/Odette MMOG/LE Benefits Survey
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Customer Success Stories
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Supporting Training and Documents Available
2

3

Improving Supply Chain Delivery Performance
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Gain control of processes
– Reduce inventory carrying costs, premium freight, rework, line stoppages, lead times
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Gain control of supply chain
– Increase inventory visibility
– Reduce supply chain risk
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Support continuous improvement
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Increase customer satisfaction
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Increase competitiveness
Actionline Magazine, Fall 2006
4

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Suppliers to comply with OEM requirements
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Suppliers in emerging markets
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Companies looking to
– Reduce supply chain risks
– Improve supply chain compliance and
– Increase delivery and long distance performance
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Regional industry associations
– Brazil, Romania, China, etc.
5

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Universities
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High Schools
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Other non-automotive industries
– Hospitals
– Construction
– Aerospace
– Chemistry
– Electronics
– Industrial
– Retail

7

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Recommended standard for materials and logistics
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Self-assessment tool for identifying gaps in processes
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Based on agreed business processes
– By OEMs and suppliers
 Ford, Chrysler, PSA, Renault, Volvo Car, Volvo Truck, etc.
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Based on extensive, best practices
–
6 chapters
– 206 criteria
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Determine current level of plant performance
8

A Level
Supplier is considered to be at or near “ world class
” standards (90% or higher).
B Level Supplier is deficient in two or more aspects of a given category or multiple categories (75% < 90%). An action plan should be put in place and the corrective action should not require a significant amount of time to implement.
C Level Supplier is deficient in one or more critical or high impact aspects (75% or less).
Action plans required to ensure deficiencies do not result in serious or prolonged issues to the customer.
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Strategy and Improvement
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Work Organization
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Production and Capacity Planning
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Customer Interface
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Production and Product Control
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Supplier Interface
10

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Available in 10 languages including:
English French German
Spanish Portuguese Chinese
Romanian Czech Russian
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Over 2000 trained users in 16 different countries

1.
Attend AIAG/Odette MMOG/LE standard training
 Understanding and building a team to complete assessment
2.
Complete self-assessment
 Attend self-assessment education and review
 Develop gap analysis and action plan customer, internal, and sub suppliers
3.
Implement Action Plan
 Internal processes and systems
 Sub suppliers (e.g, Tier 2)
4.
Customer certifies self-assessment score

13

Download the Self Assessment odette.org or aiag.org
ENGLISH
FRENCH
CHINESE

1.2.1
Why?
1.2 Objectives
Objectives relative to the Materials Planning and
Logistics function are defined, communicated and understood within the organization.
Objectives allow departments and employees to focus on areas of importance to achieve customer satisfaction and the organization's Materials
Planning and Logistics strategy.
Criteria
F2 X
All objectives are measurable and consistent with the organization's Materials Planning and Logistics strategy.
EQOS - Inventory accuracy is measured by the cycle count program, supplier delivery performance, customer delivery performance.
F2 x
Objectives are accepted by all relevant functions and are clearly cascaded throughout the organization.
EQOS reviewed by operations and at staff meetings and posted monthly for all employees to review.
F2
Objectives are reviewed with senior management at planned intervals.
Populates the gap analysis tab
15

F1
F2 Missing six results in “C” level
F3 Missing one results in “C” level
16

17

ist of All Unanswered Questions (Blank)

19

OEM
Volvo Car
Volvo Group
EMEA
Europe
North
America
South
America
Asia/
Pacific
Yes TBD Yes
Frequency of
Submission
MMOG/ LE v2 Usage
Annually
Next submittal
Yes
Western
Europe and
Central and
Eastern
Europe only
Yes
Yes
Yes
Comments
By Jan.
2008
Yes
Yes
Yes Yes
Annually. This is a requirement for
Q1.
New vehicle project
Next submittal
Next submittal
Currently, all regions using MMOG/LE for Q1 require Level A except
Europe and Asia
Pacific, which currently accepts Level B.
Strong involvement of the plant management is required in order to make sure that progress is in place.
Required all suppliers
Next submittal
Yes
Europe, a few suppliers in the Middle
East
Yes
Yes
Yes Yes
Annually. This is a requirement for Q1
Next submittal
Yes,
Brazil
India,
China
Annually self-audit submission and follow-up to be implemented
Next
Submittal
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OEM Supplier Audit Policy
Supplier evaluations are completed by Chrysler personnel using the Supply Process Analysis (SPA) for new suppliers, new supplier locations, and problem suppliers. The SPA encompasses elements inclusive of the
MMOG self-assessment. Additional audits will be conducted on suppliers that have a significant variance in the self-assessment ranking and their actual Chrysler Supply performance rating.
North America and Europe only. Potential suppliers, new suppliers, and problem suppliers. All suppliers will eventually get an audit. Major and problem suppliers will be prioritized.
Suppliers are consulted on the Global MMOG/LE in the Project Phase. Annual audits are not required annually, only during the project phase. In the Trial phase, evaluations are carried out if there are problems with the supplier.
New and problem suppliers
An attempt is made to visit all new suppliers and big volume suppliers. For potential suppliers self-assessment is the first step.
Volvo Car
Volvo Group
Potential suppliers, new suppliers, and problem suppliers
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Strategy and Improvement
– Management commitment
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Capacity and Production Planning
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Supplier Interface (Tier 2)
– Performance measurement
– Sub-tier supplier communication
– Sub-tier suppliers in emerging markets
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Improvement Plan
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Self-Assessment Quality
22

23

MMOG/LE Processes
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Materials Management Objectives
– Analyzed, measured (action plans if necessary)
– Defined, documented, communicated and understood
– Identify continuous improvement opportunities
– Corrective action for bottleneck processes
– Job descriptions, work instructions and training plans
26

Key Performance Metrics
– Delivery Performance
– Supplier Performance
– Internal performance (plan versus actual)
27

KPI4GMML 6
Supplier Communication
& Cooperation
Criteria : Self-sufficiency, Reliability,
Responsiveness Supplier problem notification,
Availability, Flexibility
KPI4GMML 4
Material Handling & Identification
KPI4GMML 5
Production
Disruption
Schedule
Modifications
Incomplete units
Line Stops or
Delivery Requirements
Supplier
Plant
D
O
C
K
ASN Message
D
O
C
K
Warehouse
Assembly Line
Customer Plant
KPI4GMML 1
ASN Performance or
KPI4GMML 2
Delivery
Accuracy
KPI4GMML 3
“VMI”
*Key Performance Indicators for Global Materials Management and Logistics

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Resource Planning
– Flexibility and availability are optimized
– Contingency plans and emergency procedures exist
 Employees are trained
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Capacity Planning
– Long, medium, short-term plans reviewed regularly
 Process in place to notify of shortages
 Support all requirements for all customers
– Minimize inventory
 Obsolescence
 Raw material
 WIP
 Finished goods
29

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Communication
– Scheduling automatically integrated into system without manual intervention
» 830/DELFOR/Planning Releases
» 862/DELJIT/Shipping Releases
– System compares resources versus requirements
– Process in place to notify of resource limitations
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Material Identification
– Segregate good/bad material
– Packaging and bar code labeling
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Production and Product Control
– Process to monitor inventory levels
» Safety stock, minimum stock, etc.
– Count Accuracy
– Product structure accuracy
– Control and handling of WIP, scrap, rejects, returns
– Traceability
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Engineering Change Control
− Participate and formal sign off
− New parts/past models/inactive parts
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Shipping
– Timing, contents and accuracy of shipping labels
– Labels match customer requirements
– Data content of ASN is 100% accurate
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Controls in place to prevent shipping discrepancies
– Customs clearing process (if applicable)
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Supplier Communication
− Process to ensure sub-tier suppliers can support production on-time with the right quantities
− Electronic communication (EDI or Internet)
» Releases, schedules and ASNs
» Planning horizon is appropriate
» In-transit visibility from ASNs
− Customs clearing process (if applicable)
− Process for suppliers to notify of shortages
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Supplier Packaging
− Bar code labels
− Process in place to define packaging and pack size
− Ensure sufficient packaging material is available
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Supplier Assessment
– Methodology to select and evaluate suppliers
– Continuous improvement process for sub-suppliers
– Supplier performance metrics
35

36

AIAG and Odette MMOG/LE Survey
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Survey administered in March/April 2007
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Over 160+ survey respondents
– North America
– Europe
– China
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Respondent demographics
– Tier 1, Tier 2, Tier 3 and Aftermarket
– Large, Midsize and Small Companies
– Implementation time was from 1 to 3+ years
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Management commitment was not measured

Top Five Performance Improvements:
Tier 1 and Tier 2-3
Regardless of Tier:
1.
Ability to meet ISO TS-16949
2.
Ability to keep existing business
3.
Data accuracy
4.
Ability to support lean (Tier 1)
4.
Overall supplier rating (Tier 2-3)
5.
Inventory Control

Top Five Performance Improvements:
Large, Midsize and Small Companies
Regardless of Size:
1.
Data accuracy
2.
Ability to meet ISO TS-16949
3.
Ability to keep existing business
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Large suppliers also indicated
– Delivery accuracy and inventory control
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Midsize suppliers also indicated
– Supports lean implementation and new business
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Small suppliers also indicated
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Overall supplier rating and new business

Top Five Performance Improvements: by Time Implemented
Regardless of Time Implemented:
1.
Data accuracy
2.
Ability to meet ISO TS-16949
3.
Ability to keep existing business
Also indicated:
• < 1year: Ability to support lean and inventory control
• 1-2 years: Inventory control
• 2-3 years: Delivery accuracy and line shortages
• 3+ years: Reduced manual entry and inventory control

Data Accuracy Positive Performance
Improvement Mean Score Over Time
70
68
66
64
Notes:
• On a 100 point scale
• Over 60 is considered a strong positive response
62
60
58
<1 Year 1-2 Years 2-3 Years 3+ Years

General Findings
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Meeting customer requirements and data accuracy are consistent benefits regardless of time, size or tier
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MMOG/LE usage continues to improve year after year
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MMOG/LE is an investment in first year of implementation
– Continuous improvement is a journey, not a destination
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Minimal differences between N.A. and Europe
– Performance improvements were consistent

43

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Renault requires the use of Global MMOG/LE in project phase (vehicles or engines)
• In July 2007 for the “Twingo” program:
– For 28 suppliers using Global MMOG/LE
 Service Rate = 91 %
– For the others :
 Service Rate = 80 %
44

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1641 suppliers in N.A. completed MMOG/LE 2006/2007
– As of October 2007, 93% are >80
– 15% improvement in past 10 years
– 85% of suppliers are at MMOG/LE Level “A”
45

Benefits of Using MMOG/LE
China Tier 1 Supplier’s Opinions
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Reduction in raw material, work-in-process and finished inventory
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More efficient process from receiving raw material to shipping inventory
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Visible signs on shop floor identifying manufacturing operations
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Use of metrics to capture failure in process
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Importance of appropriate packaging
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More organized warehouse: FIFO process used more effectively
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More control and accountability in the material ordering process
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More warehouse space
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Ease of production planning and scheduling process
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Less errors
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Ability to compare material received versus material shipped
• Ability to see ASN’s from tier 1’s and pay tier 1’s electronically
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Improved communications within the supply chain

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602 suppliers completed MMOG/LE 2006-2007
– 54% improved in Chrysler delivery rating
– Average improvement to Chrysler rating = 30%
– 36% improved MMOG/LE score
– 85% are at “A” level
47

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All new suppliers are requested to submit the document
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A Requirement for existing major and poor performing suppliers
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A Criteria of Volvo Group Key Elements Procedures, Logistics
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> 850 assessments received, > 230 verified with Volvo internal personnel (most often on location)
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Linked to supplier relationship development process
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Example N-America: Self-assessed 44% of suppliers on A-level
After verification 37% of suppliers on A-level
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Example S-America: Adherence to supply instructions (Mar to Aug)
 Total local suppliers average 89.0% correct day/quantity
 Total self-assessed suppliers 86.7%
 All verified level A-suppliers 96.7%
 All verified level C-suppliers 85.8% not included: Volvo Car Corporation
48

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Company size $50 million USD
– Supplier in Fuzhou, China
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Parts produced
– Aluminum alloy pistons
– Motor air compressors
– Diesel engines
– Outboard engines
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OEM and aftermarket supplier

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Reduced raw material and finished goods inventory by 50%
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Ability to achieve 100 points for monthly delivery rating
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Decreased premium freight
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Improved overall rating by 20%
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Obtained a competitive advantage
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Obtained new customers
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Enterprise visibility into customer requirements drives business
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Gained efficiencies in productivity, quality and delivery

London, Ontario Operations Background
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Products include pulleys, dampers and idlers
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Approximately $55 million in sales
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Supplies to OEMs and major Tier 1s
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Major customers include:
– Ford
– General Motors
– Nissan
– Automotive Component Holdings (Visteon)

London, Ontario Operations Results
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Physical Inventory
–
Reduced frequency from monthly to annually
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Inventory Value
– Reduced 50% in past years
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Delivery Performance
– On time shipping performance to customers in 2006 was 99.7%
– Delivery ratings to customers providing feedback was 100
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Supplier Performance
– On time delivery from suppliers is 100% on date required
– 97% of material requirements are communicated electronically to suppliers
–
95% of incoming material shipments are transmitted via ASNs

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North America
– TRW – Freudenberg – Akebono – Plastech – Gates - Schefnacker – Georg Fischer –
General Bearing – Wagon Automotive – Lear – Schefenacker
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Europe
– ArvinMeritor - Tower Automotive - SNOP - recia - Mecaplast - MGI Coutier - Magneti
Marelli - Treves – Robert Bosch - Rieter Automotive - Hutchinson – SIEMENS VDO
Automotive – Behr France – Metaldyne International France – TRW France - Edscha
France – Beru Eyquem SAS – Amis (Sifcor) – APM – Autoliv France – Continental –
Cooper Standard – Dunlop roues – Electrofil – Fabri – Freudenberg – GKN Driveline
– Gris Découpage - Mahle – Mann Hummel – Alps – Fuji Koyo …
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China
– Changhua – Chaoli – Jiaxuan – JCC – Xiyuan – Zhongyi – Zongshen
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South America
– Mueller
54

 1-Day standardized global AIAG/Odette training
Training
Slides &
Instructor
Manual
Odette/AIAG
MMOG/LE
Work Group
Participant
Manual
Implementation
Toolkit

•
Continuous
Improvement Tool
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What is the
MMOG/LE?
•
Assessment
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Gap Analysis
•
Implementation
MMOG/LE

MMOG/LE Training and Seminars World Wide
America’s
Europe Others
United States of America
Canada
Mexico
Brazil
700 people
200 people
100 people
United Kingdom
55 people
Czech Republic
15 people
Sweden
Germany
France
Spain
China
177 people
180 people
Slovac Republic
6 people
50 people
480 people
Romania
Poland
130 people
25 people
160 people
13 people
Russian Federation
4 people
*
Iran
15 people
Turkey
• India (training Fall 2007)
Additional Seminars held:
• Japan
• Taiwan
• Hong Kong
• Thailand

Related Guidelines and Best Practices
Available at www.aiag.org
or www.odette.org
•
M-7: Materials Management Operations
Guideline/Logistics Evaluation (MMOG/LE)
•
M-8: Key Performance Indicators for Global Materials
Management and Logistics (KPI4GMML)
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Trading Partner Agreement for Global Materials
Management and Logistics ( available March 2008 )
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E-17: Joint Automotive Industry Forum China B2B
Recommendation
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EDI/XML Project Planner
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Global Evaluation for Carriers and Logistics Service
Providers
59

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Americas
– US – Mexico – Brazil
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Asia
– Japan – Taiwan – China - Hong Kong – Thailand – India
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Central and Eastern Europe
– Poland - Czech Republic – Slovakia – Turkey – Russia – Romania
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Europe
– France – UK - Spain
60