Roadmap to Auto Supply Chain Success

[Transcript]

Jan Griffiths: 00:03

Welcome to the Auto Supply Chain Prophets Podcast where we help you prepare for the future in the auto supply chain. I'm Jan Griffiths, your co-host and producer.

Cathy Fisher: 00:13

I'm Cathy Fisher, your podcast host. Our mission is to help automotive manufacturers recognize, prepare for, and profit from whatever comes next in the auto supply chain.

Terry Onica: 00:23

I'm Terry Onica, your podcast host will be giving you best practices and key supply chain insights from industry leaders.

Jan Griffiths: 00:29

Because the auto supply chain is where the money is. Let's dive in.

Jan Griffiths: 00:37

Hello, and welcome to another episode of the Auto Supply Chain Prophets Podcast and today we're gonna talk about a roadmap for your supply chain process. Yes, but before that, we're going to check in with our co-hosts, Cathy Fisher and Terry Onica. Terry, how are you doing?

Terry Onica: 00:54

I'm doing great.

Jan Griffiths: 00:56

What do you been up to? Before you answer that question, let's stay off the work subject, should we? Something personal? What have you been up to the past week?

Terry Onica: 01:03

Well, my secondary stress outside of work is my goal every month is to run 100 miles.

Jan Griffiths: 01:10

what?!

Terry Onica: 01:11

So yeah, miles. Well, if people think that's crazy, I know. But I am up to 65, as of today, so that's good. I love running and I've done every challenge. So far. You know, 5k 10k half marathon. I did my first marathon last year. I did altra. And I did a Ragnar just recently, so I'm trying to want to what my next big running challenges, too.

Jan Griffiths: 01:38

I love that. Beat that Cathy Fisher. What you've been up to the past week?

Cathy Fisher: 01:41

You know what our management system is to be able to run 100 miles.

Terry Onica: 01:46

Yeah, weekends weekends

Cathy Fisher: 01:48

You're weekends. You're running all weekends?

Terry Onica: 01:52

On the weekend. Yeah, and having friends available to run on the weekends, because that helps the longer runs to go faster. Big time.

Jan Griffiths: 01:59

Yeah, I love that. Well, I was gonna tell you that I was all proud of myself, because I walked nine miles now I feel like a total weakling.

Terry Onica: 02:10

That's a really good job.

Cathy Fisher: 02:14

She walks every single morning.

Terry Onica: 02:16

Yes, that's great.

Jan Griffiths: 02:18

When we do the accountability lab in the mornings, I walk I walk into the meeting at the same time, I decided to switch to walking. I was running for a little while because I didn't start running until I was in my early 50s. And do you want to talk about a mindset shift? When I started running? I never saw myself as a runner. And I never literally run anywhere. I mean, I just didn't, it just wasn't my thing. Well, part of that, because they probably had massive high heels on at the time for most of my life. But that aside, so my assistant in my last job, she could see I was going to Orangetheory all the time and running on the treadmill. And she said to me, you can run a race and I was terrified. And I said, of course not. I'm not a runner. I you know when you when you tell yourself that it takes hold in your mind, and it becomes true. I am not a runner. So, for decades, I've been telling myself I'm not a runner, therefore I cannot run a race. And she said yes, you can. I've been looking at your stats because I would send him my stats from Orangetheory, right? She said, "I'm looking at your stats, you can run a race." She only bloody sign me up for raced, didn't she? and she put the papers on my desk and she goes that you run in a race you run in a 5k. And nobody was so scared all my life. And she said don't worry, you know, she's an Ironman competitor, right? I'll be there hold your hand literally on my hands every step of the way. And she did. And if I remember rightly, she put the medal on me. And she said, See, you're a runner. Now you ran a race. Boom.

Terry Onica: 03:49

You know, that is so weird. That's my story, too, Jan. I was 49, started going into the gym training on the treadmill to start up. My trainer that time says you got to run a 5k. And I'm like I said, I will never run I was adamant. You could ask anybody, friends, and family. I will never run a response. So, but she was so sweet and kind and just encouraging. Like, I gotta do this for her. So, I did it. And my goal was just to not stop, you know, keep doing the race. And I did it. And I'm like, oh my god, I bet they will say the 5k is the gateway drug. Because then now Whoa, I can run. I’m a runner. I'm a runner. Right?

Jan Griffiths: 04:25

That's right, the gateway drug. Oh, I love that. I love that, the gateway drug. Yes, yes. Well, talking about mindset and breaking barriers and breaking limiting beliefs that hold us back. How on earth are we going to transform this industry to look at supply chain differently? And what are we going to do to help them, Cathy Fisher?

Cathy Fisher: 04:48

Yeah, well, we've actually laid out a roadmap to help. So, in our work that we've been doing over the past several years, Terry and I, of course did that Herculean task scrum mapping the IATF 16949 in the MMOG/LE and discovered the 24 essential supply chain processes. And when we recognize those, our next question was, okay, so we see where we need organizations in the automotive supply chain to focus. How do we get there? What is the roadmap that we need to take? And so, we developed a five-step roadmap. And it begins with identifying the essential supply chain processes. Now, we identified these 24 commons to the automotive industry in general, from our experience working with OEMs, tier ones, tier twos, etc. Our first step in the roadmap is recognizing which processes which of the 24 essential supply chain processes should we start with, in defining our organization's supply chain management activities, and are there others and just to be clear, are 24 essential supply chain processes are not all they are the essential, that's the starting point. And they're the areas of pain that we have seen time and time again, in the automotive supply chain. They're oftentimes causal factors that are leading to measures of customer dissatisfaction, premium freight, you know, other problems the industry is constantly plagued with. So, keep in mind that there could be other supply chain processes that are at play, but those 24 get you started. So that's the first step on that roadmap. Terry, you want to talk about the second and third step.

Terry Onica: 06:28

The next steps are assessing the competencies and then actually doing training. So, on the assessing of the competencies, one of the things Cathy and I are really excited about is AIAG took our 24 essential supply chain processes and have turned that into a training that was just released in July. In the past, you would go right to MMOG/LE. So that's assuming you understand supply chain, there was no basic. And now with all the new workforce churn, we definitely need to have a basic understanding, it's not just readily available for most people that may be hired in at the plant. So, when people go back and look at their plans, and they want that first step, like I just want them to have a base knowledge, understand these basic 24 principles of supply chain that is now available to them. And then the next logical step would be then to move on to a class like MMOG/LE, where now I'm applying what I'm learning, and I'm able to assess my plan to see how well I'm doing that.

Cathy Fisher: 07:26

One of the things that we found when we identified those 24 essential supply chain processes, and started talking with organizations, people who've been in the industry, they knew the terminology, they knew the, you know, the vernacular of automotive, especially from a supply chain perspective. But there's a lot of new people coming in, as Terry mentioned. And there's definitely a unique language to supply chain in the automotive space. There are some common supply chain terms, but there's also quite a few that are unique. And so that's one of the things that this training that AIAG just released is going to definitely help new people coming into the industry. And we're hoping also the next generations, as they're coming up through their schooling, that as they look towards what industry they want to, you know, really lean into as their career, they'll look to the automotive industry. And we've got some very specific training associated with those 24 essential supply chain processes and the, let's say the terminology of the way the automotive supply chain works itself, as well. So that's, that's kind of like those steps two, and three of the roadmaps is really about the people, right, we get the processes, we get the people. And then we have to really look at the strategy within the organization. So that's really the fourth step in the roadmap is, organization now having that perspective around those key supply chain processes, and recognizing for their organization, what needs to change in our organization, to be more supply chain focused to adopt that strategic supply chain view of their business. In some cases, it's going to mean like breaking down silos and really looking at how their organization is structured. In other cases, it might be connecting existing supply chain processes with quality processes or even other processes within the business. Ultimately, the idea is that organizations recognize money is made in the supply chain, not just on the shop floor, that they bring in that mindset. And they're operating from the standpoint of supply chain being the value stream of the business versus a cost center of the business. And when that transformation happens now, you're going to talk about investing in that value stream. And that leads to the fifth step on technology. Terry told them a bit about the technology.

Terry Onica: 09:43

On the technology side, what's really important is once you understand your people, they understand their processes. Now it's a good time to apply technology, right? Because we're going to do it right. We've really got everybody down together. We understand where we're going. So, it's just the last logical step. Well One thing that I do want to mention today that I'm hoping, Jan may change this culture of people still relying on spreadsheets is the excitement around AI. And you can't really get AI on spreadsheets, it's going to be pretty darn hard to figure out an organization where all your data set number one, good luck on that one, where is it stored on the plant drive? You know, but trying to figure that out, it's going to be impossible, we need to have it someplace, we need to have systems so that we can get that data quickly. So, that we comply to AI. Because I'm hoping AI is going to be that that reason that we finally start to really take technology more seriously, in the business environment in supply chain.

Jan Griffiths: 10:42

It's going to make supply chain sexy again.

Terry Onica: 10:44

Yeah, absolutely.

Cathy Fisher: 10:47

Well, it needs to be because, you know, organizations are all about profitability. And they're always looking for profit on the shop floor or cutting costs in the procurement area, or God forbid, laying people off, making people redundant because they think that counts too much. But the truth of the matter is, there's a lot more levers within the organization from a profitability standpoint that lie within the overall supply chain. And if you're managing that supply chain holistically, all the way from your supply sources straight through to your customer, and even beyond, perhaps with your customer, depending on what happens after you deliver product to the customer. If there's you know, opportunities for recycling or remanufacturing, etc. As part of that, that circular supply chain, then organizations are missing all of these other opportunities for profitability. If they're just focused on two or three levers inside the business.

Terry Onica: 11:46

Cathy, do think, in the next version of IATF? With all that's going on with AI, just in general, do you think they're ever going to mandate that you have to automate your quality management system? And what do you think are the issues right now that we suffer? Because we don't say you have to have an automated QMS system? I wanted to hear your thoughts on that.

Cathy Fisher: 12:07

Yeah, that's a great question. You know, just to kind of put it into perspective, way back in the QS 9000 days. So here, we're talking like 93 to about 2000 Ish, I guess you would say, that standard, that automotive standard did have requirements for some level of technology use or automation. So this was in the form of EDI, ASN. And when we went to ISO TS 16949, which became a global automotive standard, those requirements got pulled out, mainly because ISO, the International Organization for Standardization, is really reluctant to push a certain level of technology, because it's standards that are can be adopted by any country, anywhere around the world. And of course, we recognize that not everybody's at the same level technology wise, however, IATF 16949 came out in 2015. Part of the reason why it was separated from ISO 9001, that ISO 9001 is the foundation, but we have these additional or supplemental automotive requirements was to allow us to be able to put back in some of those requirements that are essential to the success of the automotive industry and its future, especially as we become more technology focused. And unfortunately, without having those requirements mandated within the standards. Organizations are reluctant sometimes to make investments in technology, they maybe don't see the value of it, they'll you know, come around with Oh, well. technology's changing so fast. And I don't want to make the wrong decision and is so expensive. And what we're suffering from that is tremendous. I mean, I just think about one example of suffering is in product traceability, and product traceability crosses, all issues, crosses quality across the supply chain, process, security, everything. And the number of product recalls, especially safety recalls that we have been experiencing the past couple of years has drastically increased yet again. And why are we seeing so many vehicles being recalled, because we do not have automated systems to manage traceability, which is completely ridiculous in the technology that exists today. And even with the technology that existed five years or 10 years ago, we should have absolute traceability on all of the parts that are on the vehicle so that we don't have these massive recall campaigns for safety issues. But that's just like one example right there. Not to mention internally, the lack of visibility and coordination of what's happening and if I'm having problems in my one of my production processes, and producing a bunch of scrap or running behind. The only way my planners in supply chain know about it is when they go to the weekly schedule. Or oops, we don't have the product to send to the customer. And now we're going to have to do premium freight or call the customer and tell them that they're going to have to wait. So, there's a tremendous risk to the overall industry, but also the individual manufacturers by not adopting the automation as part of their quality systems as well.

Jan Griffiths: 15:15

That's one of the reasons why we produced two episodes now with Mike Payoink on from PennEngineering with his automated quality management system. And there's a reason why those two episodes are some of our highest numbers of downloads is because I think it's really resonating with people. And Terry, you can respond to this better than I but my gut feeling tells me and from the interviews that we've had with Mike is that they made a decision to do it because it's the right thing to do. They didn't do it because they were trying to conform to a standard or something, they just did it because they could see the benefit.

Terry Onica: 15:53

Absolutely. And you read my mind, that is something we have to fix in our culture, because the tier one’s complaint, the OEMs are always telling me what to do. But then, if you don't tell them what to do, the tier ones won't do it. And I love the fact that PennEngineering did that because they thought it was right. It was even mandated to them. That's a visionary CEO, that's a company that gets it I don't have to have my customer tell me I inherently know, it's the right thing to do. And I go and do it. But we're stuck in this culture of people know the OEMs got a mandate it? No, they don't, you can go do whatever you want to do. That's good for your business.

Jan Griffiths: 16:29

It's your business. It's your culture. And it's your decision as to where you're going to invest your money, your time and your effort. And pen engineering made a decision to invest in the QMS, which oh, by the way, resulted in an impact, a positive impact to their bottom line. So, when people think about technology, I think they think, oh, yeah, that's nice to have. But we got to cut costs, you know, we've got to just protect our margin here. But you have to look toward the future. And if you don't get out of the weeds and start to look at the future, the future is here. I mean, it's coming at us Fast and Furious, right, the level of transformation in this industry. And these investments needed to be made yesterday. And if you're not making these investments in technology, and in your processes, and in your people, now. Now. Now. Now, now, now is the time to make them. How can we help our listeners? Where can they get the five-step roadmap and the 24 supply chain processes?

Cathy Fisher: 17:35

We had put out two eBooks back about a year or so ago, that describe the overall approach to supply chain focus in the automotive supply chain. And within our eBooks, I think it's the second e book in particular, we introduced this five step roadmap for the industry as well as for individual organizations that are part of the automotive supply chain, to become more supply chain focused, and really look at the processes of supply chain that are essential to their business, the people what they need to do to get their people aligned with that supply, chain focus and competent in managing those processes. I'm going to call it the profitability piece, which is looking strategically at the business from a supply chain perspective. And then also from the technology standpoint, and Terry, your organization has just a number of case studies, not just from an automated quality management system, but really the integration of quality supply chain and other aspects of the business that are so important to supply chain.

Terry Onica: 18:35

Yes. And then Cathy and I actually offer an assessment to really bring your quality supply chain and it together. And that has been really fruitful. We find nuggets very quickly, don't we Cathy? It doesn't take long. And I think a lot of the time just getting the right people together because somebody may be in supply chain doesn't know oh, there's that capability in our ERP, I had no idea I could do that right? Or somebody in quality doesn't understand the requirements on the supply chain. And by bringing those three groups together. It's not like Cathy and I spend days and weeks and weeks of consulting, Cathy, I think in most cases, we've been able to come up with nuggets and probably eight hours or less. Oh, yeah, yeah. And there's probably looking at maybe three different areas to go after where people are having problems. So, it's just getting the right people in the room, led by people that can't understand the processes and where you might go find that information and trying to pull the pieces together. Because again, a lot of people are new, we really helped to guide that process. But I'm amazed how many things that we've found for people without even have to go dig too far for anything to help make improvements in their processes.

Cathy Fisher: 19:39

One organization, I think there were like maybe a tier two, tier three that we met with and looked at three of the essential supply chain processes that they had selected that they wanted some help on. And by the end of our time with them, they saw a whole new business model for their operations. A completely different way of operating their business from a supply chain focus. And really strategically viewing their business as a supply chain, they could see a whole new business model for how they're going to operate.

Terry Onica: 20:09

And we've applied this in other industries too, like life sciences and industrial. So, it's not just an automotive thing. We've taken our processes as is and helped other industries apply them, but in general, they're all the same. Can't be ahead what a jewelry manufacturer somebody that was made towels.

Cathy Fisher: 20:27

towels.

Jan Griffiths: 20:28

How long does this assessment take?

Cathy Fisher: 20:30

Normally, the way the assessment works is we ask the organization to select between one and three of the 24 essential supply chain processes where they feel they're having issues where they say, Hey, this is either an area of my business that is missing, or it's something that I think is contributing to our organization's negative delivery, performance or customer perception. And by having an interview with a cross functional group, so it usually includes their quality, their supply chain, their IT and optimally having their plant leadership, like a plant manager that involved as well, interviewing them, after we spend maybe a couple of hours reviewing any documentation that they may already have regarding those activities, we're able to discover, just like Terry was saying amazing things like technology that's sitting there latently that they don't even know is available, that they could just like flip a switch tomorrow. And yeah.

Terry Onica: 21:27

That thing shut things off. And we've had, oh, my gosh, what else has been shut off? And maybe that's why ERP gets a bad rep because people have shut things off. And they don't know. So, they think their ERP can't do it. So.

Jan Griffiths: 21:39

So true. So true. You know, we never, we've never talked about this assessment before. Can I come with you on one? I want to go.

Terry Onica: 21:47

Yeah

Cathy Fisher: 21:48

you know, we do some of them virtually, sometimes we'll actually go visit the client, you know, at their site, it just very much depends on their availability in that as well. But in some cases, like Terry said, it'll be we'll spend two to three hours, maybe in a couple of online sessions with them, or we'll go on site and spend a half day to a day, one organization I was mentioning that we visited, they started with three of the essential supply chain processes. And by the end of the day, like we said, they had identified a brand-new business model. And we had really covered almost all of the 24, whole day, just because one topic leads to the next leads to the next. And you start seeing that interrelationship of those processes. And that's really valuable to the organization because then they start to recognize, this is why I need to automate. So, I connect these data streams, and can have that real time visibility of what's happening in my business.

Terry Onica: 22:44

One example two that we had was a newer person at a at an automotive tier two, going after tier one business. And he was sending purchase orders. So, he's sending lots of them, why are you sending purchase orders, you should be sending a scheduled order, it's repetitive, you shouldn't need to be sending POs. And when he found that out, his eyes just lit up. And I said, well, how many days of work do you think this will save you? Did he say, nine days he's exaggerating, obviously, but just those types of things. But again, you get new people in there, they don't, they may have come from another industry don't understand there's something as a scheduler, even in life sciences, that was one of our recommendations for them. They never heard of a scheduled order. So, it's these little things like that, that are just gold to them in time savings.

Jan Griffiths: 23:33

I love it. I love the idea of the assessment, is there a cost for that?

Cathy Fisher: 23:37

No, we do that as a complimentary, mainly because we're really encouraging this movement towards a supply chain focus within the industry. And we see that as organizations start with those three processes, and recognize how quickly they can improve their business, they can improve their delivery performance, they can improve their customer satisfaction. But more importantly, they can improve their efficiency of how they're operating internally, especially by leveraging their technology. That's worth it to us, because that's going to help the industry in the long run.

Jan Griffiths: 24:12

The first request that we get after the first person, the first company that downloads the request for the assessment, I want to come on that one. Okay.

Cathy Fisher: 24:21

Yeah, absolutely.

Terry Onica: 24:22

We do have a stipulation, though, we do want you to have your plant manager, your Quality Manager or supply chain manager and IT because if you're not going to commit to those people, it's not going to happen.

Cathy Fisher: 24:33

One of the things that we've also recognized, which is the value of having the plant leadership sitting in on that discussion, is they see the importance of breaking down the silos. And the silo breaking happens, you know, before we even show up because we're inviting all those people to the table. And then as the conversation starts, there's Oh, I've got some of this. I've got some of this. Let's bring it together instead of having two separate processes and oh, well, we've got a solution. We're just not using it.

Jan Griffiths: 25:03

Well, that is a perfect way to bring it full circle and close out our episode today. I'm excited to join both of you on this next assessment. I can't wait. It'll be exciting to see who it's going to be and which companies ready to embrace transformation. All right, well, listen, ladies, have a fantastic week and I'll talk to you soon.

Terry Onica: 25:25

Thanks, Jan. Bye.

Jan Griffiths: 25:26

Bye, Terry. Bye.

Jan Griffiths: 25:31

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.