Can the Prophets Really See the Future?
In the automotive industry, supply chain is typically not viewed as a driver of profits — but that needs to shift.
Over the years, the supply chain has evolved from a mostly local or regional operation into a sprawling, diverse, global enterprise. And as the pandemic proved, it can make or break an organization.
In the premiere episode of Auto Supply Chain Prophets, co-host Jan Griffiths talks with Cathy Fisher, Founder and President of automotive management systems firm Quistem, and Terry Onica, Director, Automotive who directs vertical solution strategy for enterprise resource planner (ERP) and supply chain solution provider QAD, about the importance of changing this perspective.
Themes discussed in this episode:
- The automotive supply chain is no longer vertically integrated. It’s diverse and global.
- How to view supply chain as a moneymaker in the automotive industry.
- Supply chain has been viewed, until recently, as an operational function. It needs to be approached as a strategic one with implications for the bottom line.
- Cathy and Terry’s definition of supply chain.
- The Industrial Age roots of the traditional “command and control” style of supply chain management and why it doesn’t fit the current realities of manufacturing.
Featured on this Episode
Name: Cathy Fisher
Title: Founder and President, Quistem
About: Cathy’s firm helps its clients, particularly automotive clients, 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 (ERP) 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 (EDI) 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-one 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
[1:21] A supply chain shift: When Cathy Fisher, Founder and President of automotive management firm Quistem, began her career with General Motors in the 1980s, the supply chain was much more vertically integrated. Now it’s more global and diverse.
[2:42] Decades of shop floor experience: Terry Onica directs enterprise resource planner (ERP) and supply chain solution provider QAD’s automotive division. She began her career in supply chain in the 1990s, implementing all the electronic data interchange (EDI) for Ford.
[3:58] The good, the bad, and the ugly: Jan Griffiths points out that ERP providers have to observe and improve upon every aspect of an organization’s supply chain, and this kind of experience is invaluable to discussions like those that will take place on this podcast.
[5:46] Cash in the chain: Automotive manufacturers traditionally thought that the shop floor was the real source of money and value. Cathy and her colleagues have noticed that money is actually made in the supply chain, where sourcing, physical logistics, and materials management are key factors.
[7:26] Defining the supply chain: A range of definitions exist, but to Cathy and Terry, supply chain includes all the materials plus the purchasing at the corporate and plant levels.
[8:34] Two steps back: The pandemic created something of a return to the vertically integrated supply chain, which was more localized or regionalized. By 2020, It had evolved into a more sprawling landscape with multiple sites spread out all over the world.
[9:55] A wider view: Cathy and Terry are encouraging organizations in the automotive industry to focus on the supply chain strategically, as well as operationally.
[10:30] The green monster: One need only look at Amazon or similar organizations to see the profit potential of the supply chain. Cathy says that if the automotive industry doesn’t start to study these examples, “Amazon’s going to start selling our cars.”
[12:22] It’s time to evolve: The current “command and control” leadership model grew out of the Industrial Age. Jan believes the way for automotive companies to move ahead is to start viewing supply chain as “a strategic function that could have massive impact to the bottom line.”
Top quotes
[1:21] Cathy: “I started with General Motors back in the 1980s, and it was a very different supply chain back then, very much vertically integrated, and I've been able to observe the transformation and be a part of that transformation over the past several decades, where we've become a lot more global, a lot more diverse.”
[2:07] Jan: “Many people that profess to know about supply chain have never spent a day on the shop floor.”
[4:34] Terry: “Our philosophy is bringing those best practices of automotive and mapping them into the ERP solution, so when you implement, you don't need to worry about creating a new playbook. You go right from the playbook from the ERP provider that already has done that for you, and we see implementations going as quickly as three months or less.”
[5:52] Cathy: “We recognize that actually, money is made in the supply chain, because it's really about getting the right product at the right place in the right quantity at the right time, and that's all about the material movement. It's all about sourcing. It's all about the physical logistics and materials management functions, which so often automotive manufacturers today, either outsource or really don't have the depth of understanding of what are the key processes that are necessary to deliver on the promise of delivery to their customers.”
[10:30] Cathy: “If we look at organizations like Amazon, they've really established the importance of supply chain in the ability to make billions or trillions of dollars just off of supply chain. The automotive industry has to get on board with that same focus in order to be able to survive going forward, otherwise, Amazon's gonna start selling our cars.”
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 Episode One of auto supply chain prophets. I'm Jan Griffiths, I'm your guest host, and we're going to talk about the supply chain of the future. First, let's meet your co hosts, Cathy Fisher. And Terry Onica. Cathy, tell us, who are you? And what is your experience in the Auto Supply Chain exactly?
Cathy Fisher:Hello, Jan! Thank you so much. I'm Cathy Fisher. I am the Founder and President of Quistem. We help automotive manufacturers transform their management systems into money making machines. And I've been working in the automotive supply chain for over 38 years actually, I started with General Motors back in the 1980s. And it was a very different supply chain back then very much vertically integrated. And I've been able to observe the transformation and be a part of that transformation over the past several decades, where we've become a lot more global, a lot more diverse, and definitely a lot of changes and challenges along the way.
Jan Griffiths:So you've worked with OEMs and tier ones. And now of course, in your own business, correct?
Cathy Fisher:Yeah, absolutely. We as I mentioned, I started with General Motors back in the 1980s. And my capacity from a supply chain standpoint, has been in roles on the shop floor from a manufacturing perspective, also in the quality functions, as well as setting up the North American supply chain for BMW in their plant in South Carolina.
Jan Griffiths:Oh, what a great background. You know, I'm really glad that you have that shop floor experience, because so many people that profess to know about supply chain have never spent a day on the shop floor. And I'm glad that both you Cathy and Terry have spent time on the shop floor, you know how to grind it out on the shop floor. And we're going to be able to share some of those experiences. And I think more importantly, those experiences are going to come to bear as we talk about the supply chain of the future. So Terry, tell us a little bit about your background.
Terry Onica:Thanks, Jan, my name is Terry Onica, and I'm the director of automotive at QAD. QAD is a provider of ERP and Supply Chain Solutions. My career started back in supply chain back in about the late 1990s, where I implemented all the EDI for Ford. And then I left there and went to Johnson Controls so a tier one supplier and implemented all of their EDI as well. At that point, I got really involved in industry standards. So it AIAG the Automotive Industry Action Group, and got to be a part of a study between at the time for Chrysler and GM to Johnson Controls down our supply chain. And that's really when my passion started, because we started to document a lot of the best practices in materials management and also an EDI. And then from there, I moved on to QAD and I've been here for 20 years as the director of automotive.
Jan Griffiths:Oh, you know what you mentioned, ERP systems, I get a shiver, because I remember all the times in my career, I've been through an ERP implementation. And my background in supply chain is about 35 years, you know, shiver shudder. But there it is. And I can remember every time we went through ERP implementation these piece poor people, ie, you, as an ERP provider, you have to get right into the nasty stuff. Because you discover what's good, what's bad, the good, bad and the ugly, right? You get to see it all. So what a great experience to be able to bring to the table right now.
Terry Onica:Absolutely. We work a lot with tier one suppliers, down to probably tier two, tier three, anybody that's making a component for the car. Recently, we actually are adding on OEM startups in our customer base as well, just the vast amount of implementations that I've seen. And one of the key things Jan, it's really our philosophy is bringing those best practice of automotive and mapping them into the ERP solution. So when you implement, you don't need to worry about creating a new playbook. You go right from the playbook from the ERP provider that already has done that for you. And we see implementations going as quickly as three months or less.
Jan Griffiths:Yeah, you know, I often wondered that as I have been through several ERP implementations in my career is If the provider actually did something with those lessons learned, and what you're telling me is that you actually do.
Terry Onica:Absolutely. We actually map all of in our system IATF, 16949, and MMO GLA, which is a supply chain standard, right in the software. So it's on the dashboard, you can see what those compliance points are. And we've got all the processes mapped to them.
Jan Griffiths:Okay, Cathy, with your client base in your vast history and experience with supply chain, you're focused on stripping out waste and optimization of supply chain processes, right?
Cathy Fisher:Yeah, absolutely. And we really have recognized over the past, let's say, five years or so as we've looked at the changes that have been happening in the automotive supply chain, where traditionally the focus was on the shop floor as being where value add or the money so to speak is being made, we recognize that actually, money is made in the supply chain, because it's really about getting the right product at the right place in the right quantity at the right time. And that's all about the material movement, it's all about sourcing, it's all about the physical logistics and materials management functions, which so often automotive manufacturers today, either outsource or really don't have the depth of understanding of what are the key processes that are necessary to deliver on the promise of delivery to their customers.
Jan Griffiths:Supply chain was a term that nobody knew, you know, nobody understood it. Nobody knew what it was. And now with a pandemic, everybody's all about supply chain. It's all about supply chain, because we understand you talk about that promise of delivery, we understand what it means when those processes break down. And it doesn't happen, right?
Cathy Fisher:Yeah, absolutely.
Jan Griffiths:The other thing is strikes me is this definition of supply chain. I've seen it broad and narrow. Many, many times in my career, I've seen supply chain, as broad as including manufacturing operations and everything within the plant, plus logistics plus purchasing plus quality. And I've seen it as narrow as just logistics, or maybe you know, the traditional materials management type function. How do you see that now, Terry, supply chain with your clients? Do you see it sort of all over the map? What's going on out there?
Terry Onica:Yes, it still is all over the map, for sure. But, in Cathy and I's definition, supply chain would include all the materials plus the purchasing, both at the corporate and at the plant level. So we're really looking at all those functions when we talk about supply chain.
Jan Griffiths:That's right. And I know from my supply chain days, the purchasing piece of this is critical in the early stages of setting up the supply chain. And so often, it doesn't get the attention it deserves. But I don't want to go down that rabbit hole, because I know we're gonna have an episode focused on that. And I can't wait to get into that. Cathy, how have you seen the scope of supply chain in your career?
Cathy Fisher:Yeah, it's really transformed over the decades that I've been involved in the industry. As I mentioned early on, in my career with General Motors back in the early 1980s, it was very much a vertical integration of the supply chain, we were able to manage our suppliers by walking literally down the hall in the manufacturing floor. And of course, over the past several decades, we've really seen the supply chain diversify become a lot more globally focused. And now of course, because of the pandemic, we're actually seeing a shift back to some localization or regionalization of the supply chain. I also find that organizations tend to not have supply chain as a, let's say strategic focus of the business. There's very, very often a missing seat at the C suite for supply chain, having a voice in terms of the direction of the organization, and also supply chain being a priority for improvement and automation as well.
Jan Griffiths:Yeah, I know in my career in my last position, yes, it was a C suite position. But for most of my career, I've been shoved under somebody else, whether it's finance or operations, you are never really a standalone function with the recognition that it's so desperately deserved. And we're going to talk about all of that in future upcoming episodes. But let's get right to it. Our audience is an automotive audience and we know this industry. We've all been in it for decades. It's tough, and it's about the bottom line. Cathy, one of the taglines for this podcast, and we're gonna keep hammering this point home is that money is made in the supply chain. So what exactly does that mean, Cathy?
Cathy Fisher:Yeah, what that means from our perspective is we're encouraging organizations throughout the automotive supply chain to focus on supply chain strategically, as well as operationally, we tend to see that supply chain is typically the redheaded stepchild across all functions that we've discussed as far as what supply chain encompasses. And in fact, historically, we've seen supply chain being outsourced for some organizations to the extent of utilizing third party logistics. And the in that Stewart situation, manufacturers forget about the importance of having the right product in the right place at the right time. And if we look at organizations like Amazon, they've really established the importance of supply chain in the ability to make billions or trillions of dollars just off of supply chain, the automotive industry has to get onboard with that same focus in order to be able to survive going forward, otherwise, Amazon's gonna start selling our cars.
Jan Griffiths:Yes, good point. Terry, what do you think about why this concept is so important for auto manufacturers to adapt right now?
Terry Onica:What I think is so many years, to your point earlier, Jan supply chain has been starved. I know when I worked at Johnson Controls. And I even see in our current customer base today that there's a lot of emphasis put on quality, and in R&D, but very little attention put on supply chain and supply chain. Basically, for years we've got measured on our heroics, our ability to fight the fire, if it takes premium freight. And if we get it to the customer, and we don't shut them down, then we did our job. And I think we're paying for that really seriously right now in the industry, our lack of attention is really caused us to see just how much we haven't really been focusing on it to make it run efficiently as smoothly as it should be.
Jan Griffiths:Yeah, you're right. And you know, back in the day, I'm going way back now into the 80s. Right. People used to throw their dead wood into purchasing, it was always that oh, well, how much damage can they do? They just order and stuff, right. And we learned that lesson the hard way. But then I think it shifted to materials because I've seen companies have very, very small budgets for materials people. And they would grab just about anybody, hey, if they could talk and you know, beat a supplier up over the phone, they were good enough. You know, they were an expediter. And and they went and to your point, it was all about the heroics it was never really viewed as a strategic function that could have massive impact to the bottom line. And I believe that we have learned that now. And that's why now is the time for us to take a different view. We have grown up in with a leadership model that started with the industrial age with command and control. And the way that we look on supply chain right now is very much a product of command and control. That view will not take us into the future, it will not take us into the world of the digital realm that we're into right now. That's why I'm thrilled to be co hosting this podcast with the two of you, you know, your subject matters so well. And we're going to rip the band aid off we're going to get into the nasty stuff, the things that people don't want to talk about. We're going to bring in new ideas, and we will turn around the auto supply chain for the future and we want to bring our audience along with us. So stay tuned!
Dietrich:Are you ready to find the money in your supply chain? Visit www.autosupplychainprofits.com To learn how or click the link in the show notes below.
