How MMOG/LE Is Transforming the Automotive Supply Chain

[Transcript]

Jan Griffiths: 00:36

Hello, and welcome to Season Two of Auto Supply Chain Prophets. And this is the very first episode of season two and it's a special episode, we're going to be talking to two industry experts about MMOGLE. And revision six is just around the corner. We often talk about delivering on the promise of delivery. One sure way to do that is MMOGLE. And joining me today are two experts in the field. Our first guest is Tanya Bolden. Tanya is the Vice President of Supply Chain and Corporate Responsibility Products and Services for AIAG. Tanya, welcome to the show.

Tanya Bolden: 01:33

Thank you for having me.

Jan Griffiths: 01:34

Our other expert is, of course, our resident expert and co-host, Terry Onica, Director of Automotive from QAD. Terry, welcome back.

Terry Onica: 01:44

It's good to be here again.

Jan Griffiths: 01:46

Tanya, as our guest today. Tell us a little bit about your background in automotive.

Tanya Bolden: 01:53

Thank you for having me as a guest today. I have a long history in automotive. I started with General Motors, 20 some years ago, and I worked in various positions within General Motors. First, in Chevrolet was sales and marketing. Then I went and worked in purchasing and various positions along the way. But I went to work at the corporate staffs for General Motors, and I was the Corporate Responsibility manager for many years. And then, I left General Motors and began working at the Industry Association here. I came here to create the corporate responsibility program. But I think is we're all well aware today is that many of the issues that were once considered corporate responsibilities, such as environmental issues are now very prevalent within the supply chain. So we see a lot of overlap between those two areas. So a few years ago, I assumed the responsibility and took over leadership of the supply chain program as well as the corporate responsibility program.

Jan Griffiths: 03:01

Great background, great background to have for this subject. Terry, what is your involvement with MMOGLE?

Terry Onica: 03:08

I've been involved with MMOGLE since version one. And we just released version six, which we're going to talk about today. And I'm also the instructor for MMOGLE training at AIAG.

Jan Griffiths: 03:21

Now our audience, for the most part consists of people who are entrenched in the automotive supply chain, and most of our audience, they're certainly no stranger to MMOGLE. But for those who are perhaps coming into this for the first time, new listeners, maybe somebody from an EV company, a startup wanting to learn more about MMOGLE, let's dial it back a notch and Terry, in simple terms, can you tell us what MMOGLE is all about?

Terry Onica: 03:53

MMOGLE first stands for the Materials Management Operations Guideline Logistics Evaluation. MMOGLE is a self assessment that you take at the plant level to determine how good you are at supply chain. So, I often like to do the analogy. MMOGLE is to delivery while IATF 16949 is to quality. So, they are analyzing different areas. However, MMOGLE and IATF have a lot of complementary aspects to them. And so we look at that say for instance like a corrective action, you would do that on the quality side, but you also need to apply that on the supply chain side. The MMOGLE assessment should be led by the supply chain manager at the plant. So, it should not be led by quality which is often a mistake that a lot of organizations make because you have to look at the assessment from a supply chain perspective. It is used by many OEMs around the world. For instance, Ford, Stellantis, Volvo car, Volvo truck, Renault. And, there's many new OEMs as well that are coming on board. They require what we call the full assessment. So, in version six, it's about 176 criteria or questions that need to be answered. However, at the tier one level, you can also do MMOGLE with tier two and a can go down the supply chain. And they fill out the basic assessment, it's about half of the full, it does allow you from the basic to continue on to the full, if you need to do that. Now how it's used is that OEMs or tier ones typically use it when they're going to award you new business. They want to make sure you've got good supply chain capabilities. They also use it should you become problematic. So, if you start having troubles, they say, let's go back to your assessment. And let's figure out what's going wrong. And let's reevaluate everything. In the full, if you get an A, that means you're world class, it's the highest score. And in the basic, if you get a ZA, that just means you have the basics of supply chain that are in place. So, that's how it is used in the industry.

Jan Griffiths: 06:09

Okay. Tanya, give us more of a macro industry perspective. Why is this so important, MMOGLE? And, what's its future in the industry? Give us the automotive industry viewpoint.

Tanya Bolden: 06:22

Thank you for that question. So, first, I'd like to share a little bit about AIAG. And what we stand for and what our objectives are. So, in the spelling acronyms, I will explain AIAG stands for the Automotive Industry Action Group. We're focused on the supply chain and how we can help reduce costs and complexity. Now, it's no secret to any of your listeners that in recent years, the supply chain has been tested from weather that has you know, tsunamis, floods, things of that nature that have interrupted the supply chain flow. Let's not forget COVID. And its impact on the supply chain. And we have found that in our 40 plus years of experience, that where we can add the greatest value to industry is to focus on standardized approaches. An MMOGLE is just that. MMOGLE helps companies improve upon their supply chain performance and taking into account the many disruptions that I just mentioned.

Jan Griffiths: 07:28

Terry, why would a tier one care? Why would they care about MMOGLE? I mean, I can just imagine CEOs and senior leaders with their eyes rolling around in the back of their head going, Oh, not another standard? What? What would you say to leaders in the tier one space to say, this is important. This is why you need to do this. What's that discussion look like?

Terry Onica: 07:53

That's a very good question, Jan. What I see that a lot of industry leaders may not see is MMOGLE's ability to do two really key things in my role at QAD, I often go out and work with suppliers to help them complete the assessment before they give it to their OEM or their tier one customer. And what it does, number one is it reduces inventory. We all know that inventory is your biggest cost, right? So what MMOGLE looks at the whole supply chain from how you receive and requirements from customers and how you process it internally, and then, how you collaborate with suppliers. And what I've seen is that by people taking the assessment, and sitting down and honestly going through each of the criteria, that they reduce inventory anywhere from 15% to 60%. So, by going back and really analyzing what you're doing, maybe sometimes people fall off, you know, the wagon to doing certain things, and they need to get back using the system. It identifies that and allows them to correct that. The second area, which is really key for today's times is that it helps increase that supply chain visibility. So as a tier one, I'm bringing in that customer demand, I'm processing it automatically, and then I'm giving it to my suppliers. So that velocity that's there, it really helps that collaboration, and to get that demand down to the lower tiers very quickly. Often tier one think, especially when you have to do EDI, or web EDI with suppliers like oh, the lower tiers are never going to want to do that. In fact, they want to do that because they want to know as quickly as they can, what the OEM at the top is going to need to have. So, these are two key areas, even if you were to reduce inventory by 5%, that's probably going to be a lot for your organization. So those are the key things that I think leaders need to really look at the benefits that really help in today's times.

Jan Griffiths: 09:59

Tanya, supply chain visibility, huge topic in the industry, right? What's the industry view of MMOGLE, now? Post COVID? You know, are you seeing a lot more people who are saying, yes, give it to me anything that will help me with supply chain visibility. I want it. Give us a sense of of the AIAG members perhaps?

Tanya Bolden: 10:25

Well, I think what we're seeing in supply chain today, specifically in automotive as well as other manufacturing verticals, is the requirement for greater visibility, either for compliance with governmental legislation, or merely meeting compliance or requirements from your customer. And Terry mentioned some of the OEMs that are currently participating in MMOGLE. But what we're seeing is a growth of tier one suppliers that are beginning to use MMOGLE. And, what that is going to do is this going to help us increase that visibility as we go further throughout the supply chain. And it's important for our companies to understand their supply chain, understand how they're managing their operations, but also to understand and be able to communicate with their suppliers. So, I definitely see growth opportunities with MMOGLE, as well as Terry's mentioned, V six is now available. It's an online platform. It's a tool that is available globally. So, I think that's a bright future ahead for MMOGLE.

Terry Onica: 11:35

One other thing that I wanted to add is right now with all the workforce turmoil we're going into, right? People are coming in, they're leaving, we have a lot of turnover. What MMOGLE, really helps the plant manager is to go educate those new people coming in, on what the supply chain best practices are. Because there's so many people that are not coming in to plants that automatically understand supply chain, it helps them to have a guide as to what's important in the industry, and how material and information flow in it. So, I see that as a huge benefit to a lot of organizations as well.

Jan Griffiths: 12:16

Yeah. And it seems to me that it provides a foundation. And it's much better to be proactive and establish that foundation upfront than it is to be the other side of that when you have supply chain issues that are disrupting an OEM. And, you're done at that point, right? I mean, the costs are starting to pile up, that is not the time, the time to be looking at your supply chain is way, way up front, as soon as you possibly can understand the emoji putting it in place. And, Terry, you and I have talked many times before about new programs launching, and how the whole supply chain of how these parts are set up in the system, how the whole supply chain moves. That's a bit of an afterthought, right?

Terry Onica: 13:02

Right. And today we look at an MMOGLE version six, the real need for automation. You know, in the early years of MMOGLE to be honest, the team was a little bit leery about pushing automation too far. And in version six, we are full on pushing automation, you know, using your ERP, bringing in the EDI customer demand processing that automatically, no spreadsheets, I hate the word spreadsheet, because that just means there's going to be errors in the system, and then automating that down to the supplier. And now in this version, we're bringing in things like scenario planning, which came out of COVID, right, because we've got the semiconductors that may not need a six months to a year forecast, they may need 80 weeks, right? So we need to get better at planning the long term future. Things like I see an MMOGLE version six tools that would help with workforce automation. And even the benefits I see with MMOGLE in this version of having an automated QMS. So again, just really looking at automating the process because we have to get better at the velocity of speed and communication in the industry.

Tanya Bolden: 14:11

I'd like to also expound on a point that Terry made about the change in the workforce. Not only are we seeing our workforce age, and a lot of our subject matter experts are retiring. We're also seeing new entrants because the industry is moving fast to EV batteries, electrification, and that is bringing new supply chain partners on board that may be new to manufacturing or new to automotive. And there's also the phenomenon where because of the changes in growth and awareness of supply chain opportunities, you have employees within companies transferring in to work on supply chain. So, we have a lot of new people that are coming to this that we need to educate, and we need to transfer that knowledge. So, that's a very important reason why companies need to understand their operations, and how constant vigilance and maintaining it is so very important.

Terry Onica: 15:14

And Tanya brings up a good point with a startup. So, I've worked with a couple of startups, looking at MMOGLE. And one of the key things kind of back to training your people. I was working with the IT department, because there's a lot automation requirements. And only 20% of the IT department at this new startup, had any auto background, right. So they needed to get up to speed very quickly on industry best practice. And then there's another startup that we're working with that wants us to come in and just talk to their whole executive staff, and level set them before they get started with production and make sure that they understand all the best practices. So, I think in the startup area to Tanya's point, they can actually leapfrog the traditional OEMs because they can come in with new technology, new processes, they don't have any legacy. So I they're really embracing it quite a bit from what I can see. And I can see that it's really helping these startup companies.

Jan Griffiths: 16:13

Terry, give us a sense of how many assessments have been done out there. What are those numbers look like?

Terry Onica: 16:18

It's almost approaching 57,000, globally. I don't know the current number. But I think with IATF 16949, there was about 80,000. But that always grows as well. So MMOGLE is really catching up. And we continue to have new OEMs that are interested in leveraging it. And to tinius point earlier, we have a lot of tier ones that are out there that are also adopting it to assess their suppliers as well.

Jan Griffiths: 16:46

Terry, we're up to version six, which is being released, when?

Terry Onica: 16:50

It's already available. I believe in English today. But April 1st, all translations will be out there on MMOGLE.com. That's where you go to fill out the assessment.

Jan Griffiths: 17:00

Terry, if you were to highlight and summarize the version six changes, what are people seeing in version six that they haven't seen before? What would that be?

Terry Onica: 17:11

Tanya with her background, she's super excited that ESG is finally going to make it into MMOGLA, looking at it at a strategic level, how are we going to bring that in with the supply chain? And then also, cascading that down to your suppliers. So that is brand new, because of all the requirements in the ESG space. Scenario planning is going into MMOGLE. Now, that's new, because again, all we need longer term forecasts than what we have today. And that's the only way we're going to get there is to have a scenario planning, workforce training. So that has been escalated to F three criteria. If it's an F three criteria, it means if you miss it, you automatically go to a C score. So it's very penalizing a drop to the bottom. So we made sure that workforce training has the highest level of waiting. We don't want all the knowledge attrition that we're seeing right now. Crisis Management, the ability to make sure we're collaborating and communicating not only with our customers, but with our suppliers. And then, there's a few new f3. So, a lot of people out there that know MMOGLE, we know the word f3. They're very penalizing. We've added a few extra of those and MMOGLE means that they are the core of supply chain. And if you can't do any of them, you've got a broken foundation on your home as an analogy for that. The other thing that I would want to mention too, is that we always set out a goal to try to see if we can decrease the number of criteria, we are now down to 176 criteria. So we got rid of roughly nine or 10 criteria from the assessment as well. I do want to note in full disclosure here, sometimes we merge them. So why we decrease them, you might find it in another criteria as well, too. But overall, we were able to get the number of criteria down as well, too. So, those are some of the big changes. And then the last thing too, I want to emphasize just more and more emphasis on making sure that your processes are fully automated and integrated. So we've added a few new f3 questions in that area, for instance, supplier schedules, you have to do that. Now you have to do that automatically. So just continuing on that that path of more and more automation in the supply chain. So those are the ones that I would say are the biggest changes.

Jan Griffiths: 19:36

Okay, the ESG is fascinating to me, Tanya, tell us more about ESG. ESG in the supply chain and ESG as it relates to MMOGLE. Wow, all those acronyms. So let's dial it all the way back for those in our audience who are perhaps not familiar with the term ESG what does it mean and then walk us down that path of ESG in the supply chain if you would.

Tanya Bolden: 20:00

ESG stands for Environmental, Social, and Governance. Years ago, it was called environmental responsibility. It's been called Corporate Responsibility, social responsibility. It's been called sustainability. But what is happening now that we're seeing not only are companies focused on ESG, but we have legislative bodies who are focused on ESG. That's where we're seeing a lot of the legislation coming globally. We have NGOs that are focused on ESG, and NGOs standing for non-governmental organizations, because those are the ones that are out, enacting shareholder resolutions against companies that they don't feel, are being mindful of the factors, people or planets, and just overall governance. But I think one of the other entrants that has been focused on ESG, that some may not be as acutely aware of is the financial community. There are financial factors that are being evaluated on companies that will determine their ability to gain access to capital, or their ability to be rated on the stock exchanges. So ESG is very prominent in our business world today. And for that reason, it's very important to our companies. So that's why as Terry said, I am very excited to know that ESG is a factor in the six of MMOGLE.

Jan Griffiths: 21:36

I'm just going to be honest with you and tell you that the first time I came across an ESG survey a request from a customer that came through to the tier one I was working for, and I was in a supply chain role. It was like, Oh, no. And then there was the who does this because it crossed so many different areas within the company. Nobody knew what to do with it. Everybody just threw it around like a hot potato, maybe legal should do this. And I think we've we've come a long way from those days. Tanya, I think you would agree. But now the reality is settling in right? Companies are understanding Oh, this isn't just a nice to have or a pain in the neck survey. I gotta fill out for the customer. This is real, and it needs to be part of my company's mission and purpose. Are you seeing more progress, Tanya?

Tanya Bolden: 22:23

Yes, for sure. I mean, the your analogy about it being passed around is a hot potato. You're absolutely right. I remember at General Motors getting this and I was one of the people who had the hot potato on my desk for a period of time. But it's an integrated approach. Yeah, there's not any one company that has any one staff in a company that has sole ownership of ESG. Because as I mentioned, the various entities that are involved ESG touches not only the supply chain, it touches government affairs, it touches finance, it touches your product development, it touches engineering, because when you look at waste, and how do you account for waste, and recyclability, all of those are factors. And that's just a few there are far many more that are being looked at for ESG. And governments are getting wise. And that is where we're starting to see legislation that is requiring companies to have management systems to meet certain criteria. So that's where ESG is not owned by any one particular staff. Everyone has a role in it. And that's why the supply chain is so very important. And MMOGLE is a factor within that.

Jan Griffiths: 23:43

Terry, talk to us about MMOGLE and the quality processes. So now, we understand from Tanya, a little bit about ESG side of it, but take us into quality because now, MMOGLE is not this thing that you give it to the Materials Manager at the plant and go here do this, you know, just get it done. I might have seen that once or twice.

Jan Griffiths: 24:04

So now, we're crossing into other areas. Terry talked to us a little bit about the overlap with quality processes.

Terry Onica: 24:10

Yes. And I think it's really important and I think companies that get it right, as we always like to say on the show, "they on silo, supply chain and quality." So, what we traditionally see is that quality goes off and they create corrective action processes, they create the risk management processes. And they, if left alone by themselves, will only think about quality processes. They won't think about supply chain processes. So in MMOGLE, we made sure that we added in those complementary quality processes, so that we're doing them supply chain because they're really good things. So for instance, a corrective action hey, if a shipment comes in late, that same corrective action you do in quality, you should be applying that on the supply chain side to figure out how to fix it. You know how you collaborate with the customer when you have a problem with quality? Hey, you need to do that on the supply chain side. And what I find a lot working with suppliers is the whole risk and contingency planning. If I go into a supplier, I can guarantee you, they will show me all their contingency plans for quality and the disruptions. But they won't show me any contingency plans. What happens at the truck drivers late because quality doesn't think about those types of things. Right? What if my ASN doesn't get to the customer on time, we know we get big penalties if we don't get the ASN on time. So, what it really should do in a good organization is there a lot of things that we can leverage from quality and MMOGLE, like I'm sure they have a lot of the natural disasters already covered if we're looking at risk assessment. But by working together, they can really look at the whole picture and I think, understand the plant so much better and give so much better service to the customer, because they're looking at it from a well rounded view. And not in two separate silos where they may miss some things, right. And the other reason we like the supply chain manager to complete the MMOGLE is because if we give it to quality, and I see this all the time in training, I always say if you're in quality here, I got good news for you. This is not your responsibility. And, I always see the quality people like just clapping their hands or pointing the guy next to them or gal next to him say this is yours to do. But it's so important because when you read the question, you have to think about supply chain first. So I always like to give the example. If you have a rejected part. If you ask a quality person, what do I do when I reject a part? You know, they they count them, they lock them in the bin, you know, they go disposition on they figure out what's wrong, and they're done, right? So, if they read MMOGLE, they would say that's it, they would stop it there. But on a supply chain, Jan, you know, we're not done. We got to make sure those parts get into the ERP system do we need to order with suppliers, right? It continues on. So I really think with the two coming together kind of forces that, you get so much better processes, because we're really looking at it in one vision and not two separate silos where we're going to probably miss some things.

Jan Griffiths: 27:12

This MMOGLE version six really has the potential to break down these silos and help us work more collaboratively together, which we all know if we're going to achieve the speed and agility that we want in this industry. That's what we're going to have to do.

Tanya Bolden: 27:29

For sure.

Jan Griffiths: 27:30

Tanya, tell me what is AIAG doing to help people understand MMOGLE version six, any training modules in the works?

Tanya Bolden: 27:39

Yes, definitely. AIAG and Odette developed MMOGLE many years ago. And, we have been doing training for many years. And one of our training partners is QAD. So as we Terry is so very knowledgeable. But we have classroom trainings, we have virtual trainings, we have live virtual trainings. We have an assessment that will help companies assess where they are in their needs for supply chain, and will more than likely point out that emoji Li is an assessment that they need to engage with. We're also in the process right now, of developing an essentials of supply chain training. That's going to be six modules, six online modules that we're making available to help the supply chain and partners within the supply chain get up to speed on these very important issues. So earlier I talked about individuals that were new to a company, they may be a new hire, they may be a new entrant to the automotive industry, or they may be transitioning from one role into another supply chain role. So, that's what we develop this training to do is to help give them the basics foundational information. Because within our membership, AIAG has over 4000 member companies, and two thirds of them are small to medium sized companies. And we realize that we have to take the expertise that many of our OEMs and tier ones have and make it in a manner that is available and accessible to small to medium sized suppliers and new entrants. So that's exactly what that training is designed to do. Individuals can find out more about that training we're offering at aiag.org and it will launch on June the first!

Jan Griffiths: 29:37

Okay and we will make sure that we have a link in the show notes that people can easily access it.

Tanya Bolden: 29:42

Thank you

Terry Onica: 29:43

In the AIAG MMOGLE training. It is a one day course. We highly encourage the supply chain manager to attend but we really encourage all roles at the plant to attend. So, purchasing, supply chain, quality. We want the whole team, IT there so that everybody understands that assessment because the assessment is not just questions for IT, you need to know, work instructions for how your ERP system works, right? There's questions on suppliers in there. So we'd like to have the whole team in there. What I do in the training is what we cover just the background on MMOGLE, we go into detail on each of the six chapters. And I spend a lot of time working in the training on the criteria, because oftentimes, people will read a criterion MMOGLE. And they just read it too fast, and they miss some things in there. So I tried to slow the class down, let's really read the criteria. What does it mean? And have the team practice on? What would the evidence be to the customer? What should I be looking for? Who should I be interviewing for this criteria, and then we break into teams, and we do a lot of exercise just to get them the experience of deep diving in the, you know, the various levels and various questions of the assessment. So that's really helpful, and that I know a lot just from being involved with the MMOGLE work routine, and going out there and helping suppliers with assessment. So I know a lot about a lot of our trainees that come to the class, either supply Ford or Stellantis. So, I give them tips and tricks on when they go through audits with them, things that they need to look for, and things that they're going to be required to do. So, that's exactly what we're doing in the training as well, too. And it's been very successful today, we get good scores on it.

Jan Griffiths: 31:28

Terry, how does this impact the 24 essential supply chain processes? Is there any change in that document? Or does that stay constant?

Terry Onica: 31:37

I think in general, it'll stay pretty constant. Some of the 24 essential supply chain processes will have more emphasis now, like in the area of trainin. In forecasts planning was scenario planning, the business continuity and that whole collaboration. So, I think all the topics and the 24 will stay. I can't see anything that will be added. But there will be more emphasis and more detail in them now.

Jan Griffiths: 32:03

Tanya, what advice would you give to supply chain leaders out there in automotive listening to this podcast in terms of next steps? What should they do? What's the very next thing they should do?

Tanya Bolden: 32:16

One of the first things that Supply Chain Leaders needs to do is to establish a collaborative work group within their company, as Terry has talked about, it's not an IT issue. It's not a quality issue. It's a supply chain issue. These problems that we're facing today, as an industry, require collaboration. It requires companies to get together and talk and learn from one another, share experiences. And then from there, you can identify what we call it AIAG or those pain points or those gaps. And then when focused on the supply chain, look at MMOGLE take some of the initial assessments, make sure your people have got the basic foundational knowledge to be able to perform and improve upon your processes. Continuous improvement is always the watchword within automotive.

Jan Griffiths: 33:16

Yeah, great advice. Terry, your advice.

Terry Onica: 33:19

My advice would be for senior executives to understand what MMOGLE and what it does for their business. And how their plants are struggling today and how they can fix those gaps in their organizations. One of the things I know we talk a lot about it on the show, is just the old legacy or old ERP versions that are out there. Today, there's so much more modern ERP that can really help your organizations. And what happens is this young generations coming in, and I just asked this in the class a few weeks ago, and you come into a blank screen or green screen, it's just tough to motivate them. And the other thing is we see people going back to spreadsheets. And spreadsheets are not collaborative, they cannot get that information across fast enough. So, I really encourage the C level out there. Get with your IT organization, take a look at your ERP and the systems that you're using with a fresh eye and say how am I going to track new employees out there? How can I get people together quality supply chain and IT, which we talk about what the 24 essential supply chain processes? And where are their opportunities to really improve automation and therefore get plants working much more efficiently than they are today in many cases.

Tanya Bolden: 34:36

There's something else I would advise companies to do. Don't work in a vacuum. We can learn a great deal from collaborating with your peers, your customers and your suppliers. There's new technology coming out there. There's always something new to learn or something that might benefit you. So I encourage companies to engage with us associations such as AIAG or others, that allow them to learn and share. It's really surprising to see how companies come together and they'll bring their pain points to us. And they definitely learn from others and pick up ideas that they hadn't have otherwise been aware of.

Jan Griffiths: 34:59

Great point and an excellent way for us to close today. Tanya Bolden, thank you so much for joining us.

Tanya Bolden: 35:16

Thank you. It's been a pleasure.

Jan Griffiths: 35:19

Terry, always a pleasure.

Terry Onica: 35:21

It's great to be a guest here today.

Jan Griffiths: 35:33

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.