MMOG/LE
Materials Management
Operations Guideline/Logistics
Evaluation
January 2008
Agenda
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Why MMOG/LE?
What is MMOG/LE?
Completing the Self-Assessment
Who is Requiring MMOG/LE?
MMOG/LE Key Criteria
AIAG/Odette MMOG/LE Benefits Survey
Customer Success Stories
Supporting Training and Documents Available
Why MMOG/LE?
Improving Supply Chain Delivery Performance
• Gain control of processes
– Reduce inventory carrying
costs, premium freight, rework,
line stoppages, lead times
• Gain control of supply chain
– Increase inventory visibility
– Reduce supply chain risk
• Support continuous
improvement
• Increase customer satisfaction
• Increase competitiveness
Actionline Magazine, Fall 2006
Who is Implementing MMOG/LE?
• Suppliers to comply with OEM requirements
• Suppliers in emerging markets
• Companies looking to
– Reduce supply chain risks
– Improve supply chain compliance and
– Increase delivery and long distance performance
• Regional industry associations
– Brazil, Romania, China, etc.
MMOG/LE Outside the Automotive Industry
• Universities
• High Schools
• Other non-automotive industries
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Hospitals
Construction
Aerospace
Chemistry
Electronics
Industrial
Retail
What is MMOG/LE?
Principles of 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
– 206 criteria
• Determine current level of plant performance
Scoring Summary (ABC Classification)
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.
MMOG/LE Self Evaluation Categories
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Strategy and Improvement
Work Organization
Production and Capacity Planning
Customer Interface
Production and Product Control
Supplier Interface
MMOG/LE Translations
• Available in 10 languages including:
English
Spanish
Romanian
Turkish
French
German
Portuguese Chinese
Czech
Russian
What Does this Mean to Me?
1.
Attend AIAG/Odette MMOG/LE standard training
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Complete self-assessment
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Attend self-assessment education and review
Develop gap analysis and action plan customer, internal, and sub
suppliers
Implement Action Plan
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Understanding and building a team to complete assessment
Internal processes and systems
Sub suppliers (e.g, Tier 2)
Customer certifies self-assessment score
Completing the
Self-Assessment
Download the Self Assessment
odette.org or aiag.org
ENGLISH
FRENCH
CHINESE
Complete the Form
Each Question is Yes (“X”) or No (Blank)
1.2 Objectives
1.2.1
Objectives relative to the Materials Planning and
Logistics function are defined, communicated
and understood within the organization.
Why?
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.
F2
x
Objectives are accepted by all relevant functions and
are clearly cascaded throughout the organization.
F2
Objectives are reviewed with senior management at
planned intervals.
EQOS - Inventory accuracy is measured by the
cycle count program, supplier delivery
performance, customer delivery performance.
EQOS reviewed by operations and at staff
meetings and posted monthly for all
employees to review.
Populates the gap analysis tab
Each Question is Weighted
F1
F2 Missing six results in “C” level
F3 Missing one results in “C” level
Submit Scoring Summary
Submit Gap Analysis
List of All Unanswered Questions (Blank)
Who is requiring MMOG/LE?
OEM
EMEA
Europe
Yes
North
America
Yes
Yes
Western
Europe and
Central and
Eastern
Europe only
South
America
TBD
Yes
Asia/
Pacific
Yes
Yes
Yes
Frequency of
Submission
Comments
Annually
Chrysler’s requirement for
2008 is that suppliers must
complete the MMOG/LE
document and have it
available upon request.
Annually. This is a
requirement for Q1.
Currently, all regions using
MMOG for Q1 require Level
A; exception for Europe: for
current Q1 suppliers Level
B is accepted for 2008
certification update period
(May 1st - July 31st),
changed to be
communicated 2nd half of
2008.
New vehicle project
Strong involvement of the
plant management is
required in order to make
sure that progress is in place.
Yes
Yes
Yes
Yes
Required all suppliers
Yes
Yes
Yes
Yes
Annually. This is a
requirement for Q1
Yes, Brazil
India,
China
Annually self-audit
submission and followup to be implemented
Volvo Car
Volvo Group
Europe, a few
suppliers in
the Middle
East
Yes
OEM
Supplier Audit Policy
Supplier evaluations are completed by Chrysler personnel using the Supply Process Sign Off (SPSO) for
new suppliers, new supplier locations, and problem suppliers. The SPSO 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.
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 selfassessment is the first step.
Volvo Car
Potential suppliers, new suppliers, and low performing suppliers.
Volvo Group
OEM Focus During MMOG/LE Audits
• Strategy and Improvement
– Management commitment
• Capacity and Production Planning
• Supplier Interface (Tier 2)
– Performance measurement
– Sub-tier supplier communication
– Sub-tier suppliers in emerging markets
• Improvement Plan
• Self-Assessment Quality
Key MMOG/LE Criteria
MMOG/LE Processes
Key Criteria
• 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
Key Criteria
• Key Performance Metrics
– Delivery Performance
– Supplier Performance
– Internal performance (plan versus actual)
KPI’s for MMOG/LE*
KPI4GMML 5
Production
Disruption
KPI4GMML 6
Supplier Communication
& Cooperation
Criteria : Self-sufficiency, Reliability,
Responsiveness Supplier
problem notification,
Availability, Flexibility
KPI4GMML 4
Material Handling & Identification
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
or
KPI4GMML 1
ASN Performance
KPI4GMML 2
Delivery
Accuracy
KPI4GMML 3
“VMI”
*Key Performance Indicators for Global Materials Management and Logistics
Key Criteria
• Resource Planning
– Flexibility and availability are optimized
– Contingency plans and emergency procedures exist
• Employees are trained
• Capacity Planning
– Long, medium, short-term plans reviewed regularly
• Process in place to notify of shortages
• Support all requirements for all customers
– Minimize inventory
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Obsolescence
Raw material
WIP
Finished goods
Key Criteria
• 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
• Material Identification
– Segregate good/bad material
– Packaging and bar code labeling
Key Criteria
• 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
Key Criteria
• Engineering Change Control
− Participate and formal sign off
− New parts/past models/inactive parts
• Shipping
– Timing, contents and accuracy of shipping labels
– Labels match customer requirements
– Data content of ASN is 100% accurate
– Controls in place to prevent shipping discrepancies
– Customs clearing process (if applicable)
Key Criteria
• 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
Key Criteria
• Supplier Packaging
−Bar code labels
−Process to define packaging and pack size
−Ensure sufficient packaging material is available
Key Criteria
• Supplier Assessment
– Methodology to select and evaluate suppliers
– Continuous improvement process for sub-suppliers
– Supplier performance metrics
AIAG/Odette Benefits Survey
AIAG and Odette MMOG/LE Survey
• Survey administered in March/April 2007
• Over 160+ survey respondents
– North America
– Europe
– China
• Respondent demographics
– Tier 1, Tier 2, Tier 3 and Aftermarket
– Large, Midsize and Small Companies
– Implementation time was from 1 to 3+ years
• 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:
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Data accuracy
Ability to meet ISO TS-16949
Ability to keep existing business
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Large suppliers also indicated
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Midsize suppliers also indicated
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Delivery accuracy and inventory control
Supports lean implementation and new business
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
Notes:
66
• On a 100 point scale
• Over 60 is considered
a strong positive
response
64
62
60
58
<1 Year
1-2 Years 2-3 Years 3+ Years
General Findings
• Meeting customer requirements and data accuracy are
consistent benefits regardless of time, size or tier
• MMOG/LE usage continues to improve year after year
– MMOG/LE is an investment in first year of implementation
– Continuous improvement is a journey, not a destination
• Minimal differences between N.A. and Europe
– Performance improvements were consistent
MMOG/LE Results Identified
by OEMS
Renault and MMOG/LE
Global Benefits
• 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 %
Ford and MMOG/LE
Delivery Rating Improvements
• 1641 suppliers in North America completed MMOG/LE
• As of December 31st, 2007:
– 90% of suppliers reporting MMOG/LE Level “A”
– 90% of suppliers have a delivery rating > 80
– 15% delivery improvement in the past 10 years
Ford and MMOG/LE
Benefits
• Improved Ford Delivery Ratings
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ASN data accurate and timely
Up-to-schedule shipments
Correct packaging and labeling
Premium instances reduced
• Improved communication with the Ford customer
locations
• Fewer Ford plant shut downs due to materials
management issues
All of which lead to increased customer
satisfaction!
Ford and MMOG/LE
Benefits
Feedback and observations from supplier onsite audits
– Cost reductions; specifically inventory carrying cost of raw
material, WIP, and finished goods
– Optimization of inventory safety stock levels
– Improvement in floor space utilization
– Adherence to FIFO practices
– Accurate labeling of material
– Efficiencies in shipping and receiving areas with established
window times
– Accurate part tracking
– Correct shipment being loaded on the truck
– Better understanding of material management system
– Visual organization – Plan For Every Part
Ford and MMOG/LE
China Tier 1 Supplier’s Opinions
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Reduction in raw material, work-in-process and finished inventory
More efficient process from receiving raw material to shipping inventory
Visible signs on shop floor identifying manufacturing operations
Use of metrics to capture failure in process
Importance of appropriate packaging
More organized warehouse: FIFO process used more effectively
More control and accountability in the material ordering process
More warehouse space
Ease of production planning and scheduling process
Ability to compare material received versus material shipped
Ability to see ASN’s from tier 1’s and pay tier 1’s electronically
Improved communications within the supply chain
Less errors in delivery rating
Chrysler and MMOG/LE
Delivery Score Improvements
• 600+ suppliers completed MMOG/LE in
2006/2007
• 54% improved in Chrysler delivery rating
• Average improvement in Chrysler rating = 30%
• 36% improved MMOG/LE score
• 85% are at “A” Level
Chrysler and MMOG/LE
MMOG Benefits
For Chrysler
• Improved Delivery Ratings
in multiple categories:
– Shipment data is improved
– Maintained deliveries to
schedule
– Reduction in expedited freight
• Improved plant up-time
• Improved communication
with plants
• Provides measurable,
objective data for supplier
improvement
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For Suppliers
Supports LEAN principles
Reduction in material,
inventory, safety stock
Improved communications
with customers
Reduced downtime incidents
Improved quality and
efficiency of window time
conformance
Provides measurable,
objective data for supplier
improvement
Volvo Group and MMOG/LE
Benefits
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All new suppliers are requested to submit the document
A Requirement for existing major and poor performing suppliers
A Criteria of Volvo Group Key Elements Procedures, Logistics
> 850 assessments received, > 230 verified with Volvo internal personnel (most
often on location)
Linked to supplier relationship development process
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)
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Total local suppliers average
Total self-assessed suppliers
All verified level A-suppliers 96.7%
All verified level C-suppliers
89.0% correct day/quantity
86.7%
85.8%
not included: Volvo Car Corporation
MMOG/LE Benefits and
Success Stories from
Suppliers
JCC
• Company size $50 million USD
– Supplier in Fuzhou, China
• Parts produced
– Aluminum alloy pistons
– Motor air compressors
– Diesel engines
– Outboard engines
• OEM and aftermarket supplier
JCC and MMOG/LE
Benefits
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Reduced raw material and finished
goods inventory by 50%
Ability to achieve 100 points for monthly
delivery rating
Decreased premium freight
Improved overall rating by 20%
Obtained a competitive advantage
Obtained new customers
Enterprise visibility into customer
requirements drives business
Gained efficiencies in productivity, quality
and delivery
GATES – London Operations
• Products
manufactured
include pulleys,
dampers and idlers.
• Approx $55 million
in sales (medium
size)
• Supplies to both
OEMs and major
Tier 1’s
– Ford, General Motors,
Nissan, Automotive
Component Holdings
(Visteon)
GATES and MMOG/LE
Benefits
CUSTOMER DELIVERY PERFORMANCE
• On time shipping performance to customers in 2007 was
99%
• Delivery ratings to customers providing feedback is 100
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
GATES and MMOG/LE
Benefits
PHYSICAL INVENTORY
• As accuracy improved went 12 to 1 a year
– Estimated cost for a physical inventory is $15-20K
(overtime wages, equipment rental, inventory tags, etc.)
INVENTORY VALUE
• Reduction of approx. 50% since 2001
– Since 2001 sales have increased by 20%
EXPEDITED SHIPMENTS
• Premium freight on inbound/outbound material has
gone from $180K in 2002 less than $25k last year
Supporting Training and
Documents Available
Harmonized Global Training
 1-Day standardized global AIAG/Odette
training
Training
Slides &
Instructor
Manual
Odette/AIAG
MMOG/LE
Work Group
Participant
Manual
Implementation
Toolkit
MMOG/LE Course Objectives
• Continuous
Improvement Tool
• What is the MMOG/LE?
• Assessment
• Gap Analysis
• Implementation
MMOG/LE
MMOG/LE Training and Seminars World Wide
America’s
Europe
Others
55 people
United Kingdom
United States
of America
700 people
23 people
177 people
Czech Republic
180 people
Sweden
China
6 people
4 people
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Slovac Republic
Iran
Canada
130 people
50 people
Germany
Romania
Turkey
200 people
Mexico
640 people
France
25 people
Poland
100 people
160 people
Brazil
Spain
15 people
13 people
Russian Federation
• India (2008)
Additional Seminars held:
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Japan
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Taiwan
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Hong Kong
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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)
• Trading Partner Agreement for Global Materials Management
and Logistics (available March 2008)
• E-17: Joint Automotive Industry Forum China B2B
Recommendation
• EDI/XML Project Planner
• Global Evaluation for Carriers and Logistics Service Providers
MMOG/LE Seminars held Globally
• Americas
– US – Mexico – Brazil
• Asia
– Japan – Taiwan – China - Hong Kong – Thailand – India
• Central and Eastern Europe
– Poland - Czech Republic – Slovakia – Turkey – Russia – Romania
• Europe
– France – UK - Spain
Example of Bulleted List
• Automotive Industry Action Group
– Not-for-profit Association
• Not against it, either
• Everyone wins
• Money
– Money
– More Money