24 Essential Processes to Build a Foundation of Supply Chain Management
Two automotive supply chain experts sit down in a room and scour two of the most widely consulted, notoriously complex protocols for automotive supply chain management: the Automotive Industry Action Group’s Global Materials Management Operational Guidelines/Logistical Evaluation (MMOG/LE) and International Automotive Task Force (IATF) 16949.
They emerge, probably with plenty of eyestrain, and produce a meticulously assembled document that identifies 24 essential supply chain processes and connects them to each other.
The aforementioned experts are Auto Supply Chain Prophets co-hosts Cathy Fisher and Terry Onica, and they’re making the case for breaking down silos through open communication and critical analysis of processes.
In this episode of Auto Supply Chain Prophets, they talk with co-host Jan Griffiths about the patterns that emerged when they identified each process and looked for connections between them, the results their clients have seen upon applying these findings and the reception they’ve been getting from original equipment manufacturers (OEMs) so far.
Themes discussed in this episode:
- How delivery has always been a part of quality
- The cohesion and growth that can occur when you break down silos and communicate
- The application of the processes across verticals
- The five categories that Terry and Cathy created to map out all 24 processes across the business continuum
Featured on this Episode
Name: Cathy Fisher
Title: Founder and President, Quistem
About: Cathy’s firm helps its clients, particularly automotive manufacturers, eliminate customer complaints and increase their profits. She has worked in the automotive supply chain since the 1980s when she started her career with General Motors.
Connect: LinkedIn
Name: Terry Onica
Title: Director, Automotive at QAD
About: For two decades, Terry has been the automotive vertical director of this provider of manufacturing Enterprise Resource Planning software and supply chain solutions. Her career began in supply chain in the late 1980s when she led a team to implement Electronic Data Interchange for all the Ford assembly and component plants.
Connect: LinkedIn
Name: Jan Griffiths
Title: President and Founder, Gravitas Detroit
About: A veteran executive in the automotive industry, Jan previously served as chief procurement officer for a $3 billion, Tier 1 global automotive supplier. As the president of Gravitas Detroit, Jan provides online courses, speeches, podcasts and workshops to break the mold of command and control leadership to help you unleash the potential of your team and allow authentic leadership to thrive.
Connect: LinkedIn
Episode Highlights
Timestamped inflection points from the show
[00:26] From pain points to processes: Five years ago, Cathy Fisher and Terry Onica began identifying pain points for OEMs, especially in terms of supplier-related issues. Mostly, they found delivery failures. This led them to scour the IATF 16949 and the MMOG/LE guidelines to see if they could find essential processes that appeared in and were linked to each other in both documents.
[3:43] Getting the word out: After identifying 24 essential auto supply chain processes and vetting their framework through the AIAG supply chain steering committee, they reached out to almost 50 OEMs with the data.
[6:02] Seek and you shall find: The standards that Cathy and Terry consulted have been around for years and have shown an interconnectedness between quality and delivery. Yet because of the siloed nature of supply chain quality and other areas of supply chain, OEMs have not capitalized on this relationship to improve delivery.
[7:29] Pick and choose: Cathy and Terry organized the 24 essential processes into five categories, so OEMs can more easily start at various points depending where they are in their life cycles.
[8:37] Cohesion: Just working through one of the 24 processes is proving helpful to Terry and Cathy’s clients by ensuring that each organization is “building a foundation of supply chain management, not just disjointed individual processes,” Cathy says.
[10:09] It’s that simple: By having open, honest discussions with clients, Cathy and Terry are able to help them discover fundamental changes that need to be made. Sometimes it’s as simple as switching from purchase orders to scheduled orders.
[11:30] Seeing the value: The 24 processes give organizations a starting point that enables them to see the true value-add of supply chain and which activities are involved in creating that value.
[Download Cathy and Terry’s whitepaper, “Delivering on the Promise of Delivery,” Parts I and II, which examine all 24 processes in detail.]
Top quotes
[1:25] Cathy: “We looked to the automotive quality standard, IATF 16949, and the existing MMOG/LE — materials management, operation guide, and logistics evaluation, which incidentally has been around for well over 20 years — and looked at the intersection of those two standards to see, are there common processes? Are there processes that link to each other that are essential to achieving delivery performance throughout the automotive supply chain. And that was essentially where the 24 essential supply chain processes came from.”
[4:57] Cathy: “Delivery has always been a part of quality, and these 24 essential supply chain processes already have fingerprints inside of the IATF 16949 standard.”
[5:29] Terry: “We started introducing them to other verticals, so outside automotive. This past week we were with a life sciences company using the 24 processes, and they completely related to them, and they made basically no change to those 24 processes.”
[8:38] Cathy: “We find that working through just even one of these processes tends to help us link to other supply chain processes that are in the 24 essentials, that are the predecessor processes from a system standpoint, in ensuring that the organization is building a foundation of supply chain management, not just individual processes that are disjointed.”
[10:18] Terry: “We started talking [with one client] about production scheduling, and they were using purchase orders, and we know we’re in a scheduled order environment, but the person didn’t know about it. So when we told them about switching to scheduled orders. Instead of all this time they’re spending doing purchase orders, you can just hit a button and all that will go out to your suppliers. And we asked him, how much savings will this bring to you? And his answer was nine days a week. These are the types of things we’re uncovering by just sitting down, having open, honest discussions.”
[12:09] Jan: “You can either spend the time going line by line through MMOG/LE or the IATF 16949 and then map all of that together and understand how that relates to your supply chain, or you can download the 24 essential supply chain processes.”
[Download Cathy and Terry’s whitepaper, “Delivering on the Promise of Delivery,” Parts I and II, which examine all 24 processes in detail.]
Transcript
We really can't predict the future because nobody can. What we can do though, is help auto manufacturers recognize, prepare for in profit from whatever comes next. Auto Supply Chain Prophets gives you timely and relevant insights and best practices from industry leaders. It's all about what's happening now in the automotive supply chain and how to prepare your organization for the future. Because the auto supply chain is where the money is.
Jan Griffiths:Hello, and welcome to another episode of Auto Supply Chain Prophets podcast and today we are going to go deep into the 24 essential supply chain processes. 24 that seems like rather a lot. Cathy, tell us about the 24 supply chain processes? Where did this come from?
Cathy Fisher:Yeah, we thought there were quite a few as well, we had to put a cap on two dozen. So there were these came from Terry and I started about five years ago really looking at what was going on in the automotive supply chain and where the pain points were, especially for OEMs in terms of their suppliers and supplier performance. And we were finding predominantly issues were around delivery and terms of the supplier failures. And as we identified what was really behind these delivery issues, because so many organizations, that if they get a customer complaint for delivery, they'll just expedite to fill the customer need, but they never really dig down into what are the processes in my organization that contributed to that delivery performance issue. And so we're not systematically, let's say improving the processes of the supply chain. So, Terry and I really said there's got to be something in the existing standards that the automotive industry is using that can help us solve this delivery performance issue. So we look to the automotive quality standard IATF 16949, and the existing MMOGLE: Materials Management, Operation Guide, and Logistics Evaluation, which incidentally, has been around for well over 20 years and looked at the intersection of those two standards to see are there common processes are their processes that link to each other that are essential to achieving delivery performance throughout the automotive supply chain. And that was really where the 24 central supply chain processes came from. Certainly, there could have been more and you know, in fact, I think as organizations mature in developing their supply chain management systems, they may have additional processes, but we said let's kind of keep it to what are the foundational processes that are necessary to deliver on the promise of delivery. And so, we we carved our list of those intersection processes between supply chain and quality down to these 24.
Jan Griffiths:You mean to tell me that you guys sat down and went through the MMOGLE and IATF 16949 line by line?
Cathy Fisher:Yeah, we mapped it. And we actually part of what started this was MMOGLE was going through their revision to the fifth edition. And the IATF standard had just come out in 2016. And we said, well, let's see where there there's alignment, what's the intersection? And so yes, we literally went line by line point by point requirement by requirement like to say shall by shall, the ISO standards that we went through and mapped that relationship between the supply chain logistics evaluation and the quality management standard. And we found that there was a lot of intersection.
Jan Griffiths:See, I would I'd rather have a nice pic in the forehead and do that.
Cathy Fisher:Yes, we did the hard work for you.
Jan Griffiths:I think most people in a supply chain leadership role, you know, I mean, it depends on who you are your personality type, right? But I would never want to do that. I just want to know, just tell me what it is I need to do to get my supply chain operating the way I need it to operate. I want to drop money to the bottom line of this business. Just tell me what I need to do. So what you've done is you you've basically done all that painful hard work. And that's what this document is. Is that right, Terry?
Terry Onica:Yes. And one of the things is once Cathy and I got done identifying these 24 essential supply chain processes, we just didn't leave it up to our knowledge. We wanted to go out and make sure that we nailed it right because we want to bring the industry back to those supply chain basics. We need it now more than ever, but she with all the workforce shortages. So we took our time we actually vetted it through the AIAG supply chain steering committee. We personally reached out to OEMs that Cathy and I have good relationships with we reached out to lower tier suppliers we left no stone unturned. Cathy when it was all said and done, maybe About 30 companies we probably spoke to.
Cathy Fisher:I'm gonna say at this point is getting close to 50. And every single organization that we share these 24 essential supply chain processes with looked at that and said, Yeah, like this, these are the things that are behind, or the lack of these processes are what are behind why we're having delivery performance issues. And what's interesting is that, you know, as I mentioned, MMOGLE has been around for 20 plus years, the IATF standard is really the follow on to the previous ISO/TS 16949. And some people remember QoS 9000, way back in the day. Delivery has always been a part of quality. And these 24 essential supply chain processes already have fingerprints inside of the IATF 16949 standard. It's just we're not focusing on the application of the quality management requirements from that supply chain perspective. In organizations, there's a tendency to separate out these silos of quality handles the quality stuff, supply chain, yeah, you figure out your own processes over there.
Terry Onica:And the other thing that Cathy and I were amazed at too is we started introducing them to other verticals. So, outside automotive. And, we were just this past week, we were with a life sciences company, using the 24 processes. And they completely related to them. And they made basically no changes to those 24 processes. They were like, yep, we understand them. We got it. We're gonna use them just like the exact same way. We've done them with industrials, consumer products. And nobody's disagreed. We, Cathy and I have not had to make one change to those 24 processes.
Jan Griffiths:Well, I'm not surprised about that. But something that strikes me as a benefit for organizations would be the EV companies to new startups. Right. So, we've talked in a previous episode about the fact that one of the problems with traditional automotive supplier is that we've got all this legacy cost. These systems that are many of them are built up around mistrust, and these very complicated systems. But the other side to that discussion is the EVs, the startups, don't have anything they don't. They don't have any legacy systems, they don't have the tribal knowledge, which can be good and bad. But what this does is it's really helpful I would imagine, to both traditional two, one or two, two in the supply base in automotive supply base, but also to the startup. What, what do you think, Terry?
Terry Onica:Well, it's funny that you say that Kathy and I, in July, we'll be starting to work with a new Evie startup to go through the 2014 essential processes and to start doing that training. So absolutely, they were all over it. Not everybody doesn't necessarily have automotive knowledge. So, making sure that they level set everybody on their knowledge and really focus on industry best practice was really going to be very beneficial to them.
Jan Griffiths:Again, Cathy, where does somebody start with this document, right with these 24 steps, as a supply chain leader, if you're a supply chain leader listening out there right now, what would your advice be to them?
Cathy Fisher:Well, I would say it really depends where your organization is kind of in your life cycle. So Terry just mentioned, we're doing some work with a new EV startup. And what we're doing with them, you'll notice that as we present the 24 essential supply chain processes. We've organized them into five categories that really recognize the business continuum. So we start with kind of the business planning or kind of the strategic aspect of the business, then we get into program planning and operational planning, operational control, and then performance. And so what we suggest is that organizations take a look at where are they having issues most acutely, right now in delivering on the promise of delivery to their customers. And for some organizations that are existing, that's actually going to start at operational planning and control of these 24 essential supply chain processes. Oftentimes, organizations come back to us and say, Yeah, we really struggle with demand planning, production, scheduling those types of activities. That's where we need some help. So we'll suggest let's dive into that sector of these 24 essential supply chain processes. And we find that working through just even one of these processes, tends to help us link to other supply chain processes that are in the 24 Essentials, that are the predecessor processes from a system standpoint, and ensuring that the organization is building a foundation of supply chain management, not just individual processes that are disjointed. And in fact, just recently, we're working with a client organization. We spent a day with them, where they had selected three of these 24 central supply chain processes. This is an existing organization. They've been in business for several decades, and they said hey, our delivery issues are really coming out of our production scheduling, in our inventory management and that. And, as we started looking at those two or three processes that they wanted to focus on, we ended up at the end of the day, really helping them see the opportunity for fundamental change in their overall business strategy, how they were serving their customers, because of recognizing, where there were constraints in their supply chain processes, or just quite frankly, missing supply chain processes that could enable them to be better prepared to deliver on the promise of delivery to their customers.
Jan Griffiths:Well, this, now is the time to tear into your supply chain processes. Well, it was actually before the pandemic. But if the pandemic has certainly put a spotlight on supply chain, and the need to go deep into these processes. Terry, any other examples to share with us?
Terry Onica:We work with another client, that we sat down with the plant manager, supply chain manager, quality, IT together, and we started talking about production scheduling, and they were using purchase orders. And, we now we're in a scheduled order environment, but the person didn't know about it. So when we told them about switching to schedule orders and said of all this time they're spending doing purchase, or you can just hit a button and all that will go out to your suppliers. And we asked him, you know, how much savings will this bring to you? And his answer was nine days a week. So these are the types of things that we're uncovering by just sitting down having open, honest discussions.
Cathy Fisher:Yet what's interesting, as we start those conversations with organizations, we're realizing that they've really suffered a lack of understanding or competencies within their business around supply chain. And that supply chain is a management system as well. In fact, you know, we contend that it is the way organizations make money. You know, we love manufacturing, but it's a part of the supply chain when you come down to it. And organizations have not given the attention to supply chain as really their value stream, so to speak, in the systematic way that we've done from a manufacturing perspective, and that's where these 24 essential supply chain processes help out because it gives organizations a starting point of what are those activities? What are those processes that are necessary in the organization to fulfill customer's requirements, especially from a delivery performance perspective. And then, let's take a look at what those processes how they have been defined inside of your organization, how are they currently operating? And what is the visibility, transparency, and even the accuracy of information that you're getting from those processes for decision making as well.
Jan Griffiths:Well, there it is supply chain leaders out there. You can either spend the time going line by line through MMOGLE or the IATF 16949 And then map all of that together and understand how that relates to supply chain or you can download the 24 essential supply chain processes. A lot of the work, well find all of work has been done for you. You can pick it up, pick the document up and start implementing right away.
Dietrich: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.
