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MMOG / LE Update

Dan HoweMay 11, 2011

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AGENDA

• MMOG/LE Organization at GM• What is MMOG/LE?• Why did GM adopt MMOG/LE?• What is GM’s MMOG/LE strategy?• What is the current status of GM’s MMOG/LE initiative?

• What resources are available to assist Suppliers with MMOG/LE and GM-specific questions?

• What feedback has GM received from Suppliers?• FAQ’s• Question and Answer

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Bob SociaVP Global

Purchasing and Supply Chain

Bill Hurles Executive

Director Global Supply Chain

Ken Cavanaugh

Director Global Supply

Chain

North American MMOG/LE Team

GM Europe

GM International Operations

GM South America

JV Partners

Executive Leadership

and Support

Processes & Systems

RegionalMMOG/LE

Teams

MMOG/LE Organization at GM

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What is MMOG/LE?

• Materials Management Operations Guidelines /Logistics Evaluation

• Supplier Self Assessment Tool • Used by both supplier and GM • Developed by OEM’s & suppliers through Automotive

Industry Action Group (AIAG) and Odette (Europe)• Comprehensive evaluation of supply chain performance and

capability• Common Format• Tool to identify & eliminate waste in the supply chain• Organized into these focus areas:Strategy & Improvement Work Organization Capacity &

Production Planning

Customer Interface Production & Product Control Supplier Interface

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MMOG/LE v. 3 Self-Assessment

Identifies gaps in standard processes / current level of performance across 6 main operational areas with ultimate goal for supplier to resolve those issues, develop contingency plans, and AVOID any impact to the OEM’s ability to build.

Focuses supplier attention on SCM impact areas inclusive of: dealing with customer volume fluctuations, capacity constraints, Tier 2 capability, resource allocation, training gaps, etc. 1 2 3 4 5 6

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Chapters / Subchapters

CHAPTER 1 - STRATEGY AND IMPROVEMENT 1.1 Vision & Strategy1.2 Objectives 1.3 Measurement, Analysis, and Action Plans 1.4 Continual Improvement 1.5 Supply Chain Development

CHAPTER 2 - WORK ORGANIZATION2.1 Organizational Processes 2.2 Organizational Procedures 2.3 Resource Planning 2.4 Work Environment & Human Resources

CHAPTER 3 – CAPACITY & PRODUCTION PLANNING

3.1 Product Realization 3.2 Capacity Planning 3.3 Production Planning 3.4 Systems Integration  

CHAPTER 4 – CUSTOMER INTERFACE

4.1 Communication 4.2 Packaging & Labeling 4.3 Shipping 4.4 Transportation 4.5 Customer Satisfaction & Feedback

CHAPTER 5 – PRODUCTION & PRODUCT CONTROL

5.1 Material Identification 5.2 Inventory 5.3 Engineering Change Control 5.4 Traceability

CHAPTER 6 – SUPPLIER INTERFACE

6.1 Supplier Selection 6.2 Materials Planning & Logistics Agreement 6.3 Communication 6.4 Packaging & Labeling 6.5 Transportation 6.6 Material Receipt 6.7   Supplier Assessment

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Why Did GM Adopt MMOG/LE?

• Evolving business environment • Improve GM/Supplier relationships• “Customer of Choice”

• Defines industry expectations of Suppliers’ supply chain processes• Adopted by Ford, Chrysler, Renault, Volvo Truck, Iveco, PSA• Similar process approach as ISO/TS 16949 or QS9000

• Improve supplier performance• Throughout multiple tiers of the supply chain• Less time spent on supply disruptions• Launches, issues and non-performing suppliers as first

priorities• Move from reactive to proactive approach to anticipate

issues• Positive feedback from suppliers

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What Is GM’s MMOG/LE Strategy?

• Taking a “Helping Hand” Approach

• Emphasis on the benefits to Suppliers and to the

OEM’s

• Managing expectations between GM and Suppliers

• Building stronger relationships

• Continuously improving processes

• Enhancing industry collaboration

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Identification of Issues

and non-performa

nce

Gather Supplier Perform

ance Metrics

Apply weighte

d prioritiza

tion criteria

Align efforts with Pain

Points

•Schedule Compliance•Plant Disruptions and Downtime•Constraint / Bottleneck •Problem Suppliers Identified by Mfg Plants •Premium Freight•Containerization•Launch involvement•New Suppliers to GM•Engineering Change and Obsolescence•Communications

Risk-based Selection Strategy

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Tota

l Po

pula

tion

0% 100%

Percentage Received

Improvement Efforts

• Align improvement efforts with internal Supplier performance indicators, exposure to critical launch activities and overall risk.

• Improvement efforts include 1:1 Supplier contact, review of Supplier gap closure plans, and development of reference and training materials.

Identification of Issues

and non-performa

nce

Gather Supplier Perform

ance Metrics

Apply weighte

d prioritiza

tion criteria

Align efforts with Pain

Points

Risk-based Selection Strategy

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Benefits to Suppliers

• As a global standard for the automotive industry, MMOG/LE provides a common set of business procedures for the materials management function.

• Use of the Global MMOG/LE principles saves time and costs, while helping to ensure effective, efficient management of materials.

• Implementation of this standard may produce tremendous benefits, including up to the following: • An 85% reduction in premium freight costs.• An 80% reduction in obsolescence costs. • A 43% reduction in inventory carrying costs. • A 20% reduction in data entry time. • Gain control of processes:

• Reduce line stoppages, rework, lead times, etc.• Gain control of supply chain:

• Increase inventory visibility.• Reduce supply chain risk.

• Support continuous improvement .• Increase customer satisfaction.• Increase competitiveness.

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Benefits to OEM’s

• Operate in a Proactive vs. Reactive mode• Identifies potential process gaps and risks earlier• Drives industry-level, sustainable process

improvements• Highly capable, disciplined, and process-oriented

Suppliers• Expectations between OEM’s and Suppliers are

documented, understood and result in benchmark performance.

• Fewer disruptions• Fast, efficient and more flexible reaction to industry

and customer requirements • “Customer of Choice”

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Current Status of GM’s MMOG/LE Initiative

• mmog.le@gm.com mailbox in place for questions/submissions, access by global team

• Responses to questions and Thank You’s usually processed within 48 hrs.

• History is kept for all communications• Bulletins & FAQ’s posted in Supply Power• Utilization of ultimate Dun & Bradstreet identification number (Duns) acceptable for 2011 calendar year submission, but Manufacturing Duns is required for 2012 submission

• Desk and Site audits began in March• Planning for education and networking sessions

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Future Actions

• Compare internal performance feedback with Supplier’s self-assessment Engage Suppliers where variances exist Engage internal and/or external expertise to

assist Suppliers in strengthening their processes and performance

• Leverage Global Regional Reps to work with Suppliers in their regions

• Prioritize Supplier deep dives based on exposure to plants

• Initiate projects that focus on particular areas of interest

• Create training materials

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A B C0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ScoresA: The organization is compliant in all key criteria and can demonstrate that the materials management processes in use at the facility are best practice.  

B: The organization is deficient in several areas that may impact its ability to support the needs of the customer.

C: The organization is deficient in several key criteria. An action plan should be developed immediately and implemented in a timely manner to ensure deficiencies do not result in serious or prolonged issues for the customer.

Results

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Results (continued)

F3 - A key MP&L process that is a fundamental requirement of the organization's operations. If an F3 criterion is not met, there is a high risk of interruption to the organization's and/or customer's operations and the likelihood of additional costs being incurred.

F2 - An MP&L process that has significant importance to the efficiency and effectiveness of the organization's operations. If an F2 criterion is not met, the organization’s performance and customer satisfaction may be seriously affected.

F1 - An MP&L process that demonstrates ongoing control of operational processes contributing to the organization's overall competitiveness. If an F1 criterion is not met, the organization’s long-term sustainability and competitiveness may be negatively impacted.

F3 F2 F10%

10%

20%

30%

40%

50%

60%

70%

80%

Non-con-formances by Weight

F3 35 questions, 30% of overall score F2 75 “ 43% “ F1 96 “ 27% “

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Results (Continued)

Chapt

er 1

Chapt

er 2

Chapt

er 3

Chapt

er 4

Chapt

er 5

Chapt

er 6

0%

5%

10%

15%

20%

25%

30%

Non-conformances by ChapterCHAPTER 1 - STRATEGY AND

IMPROVEMENT

CHAPTER 2 - WORK ORGANIZATION

CHAPTER 3 - CAPACITY & PRODUCTION PLANNING CHAPTER 4 - CUSTOMER INTERFACE CHAPTER 5 - PRODUCTION & PRODUCT CONTROL CHAPTER 6 - SUPPLIER INTERFACE

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Results (Continued)

Areas of non-compliance:• Problem identification, analysis and closure• Documentation of processes and workflows• Training• Integrated capacity planning• Container management• Traceability• Tier 2 management

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Help Resources

• AIAG: www.aiag.org

• Odette: www.odette.org

• GM MMOG/LE Team: mmog.le@gm.com

• QAD: Terry Onica tjo@qad.com

• LinkedIn groups

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Testimonial

“Over the years of embracing MMOG/LE our score has moved from “C” through “B” and finally “A”. We have made many improvements to our overall operation. The Assessment is a sound basis for understanding the requirements of our Customers and assuring we have in place effective procedures and work instructions that satisfy those. Integration of Purchasing and Supply Chain efforts to our Team Manufacturing and Quality efforts has provided benefits in planning, inventory control, containment and communications with tier suppliers. Our world class PPM numbers reflect the benefits of our efforts.”

- Means Industries Saginaw, Michigan

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• Posted on GM SupplyPower

FAQ's

FAQs

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A B C Scores Definition

A-Level: The organization is compliant in all key criteria and can demonstrate that the materials management processes in use at the facility are best practice. In support of continual improvement, the development of an action plan should be considered in order to eliminate any remaining unmet criteria. A-Level classification will be realized by achievement of all the following:1) Compliance to all F3 criteria2) Non-compliance to fewer than six F2 criteria3) A total score of 90% or higher  

B-Level: The organization is deficient in several areas that may impact its ability to support the needs of the customer. An action plan should be developed and implemented in a timeframe that meets the needs of the business and its customer(s). B-Level classification will be realized by achievement of all the following:1) Compliance to all F3 criteria2) Non-compliance of six to 12 F2 criteria3) A total score greater than 75% and less than 90%  

C-Level: The organization is deficient in several key criteria as defined below. An action plan should be developed immediately and implemented in a timely manner to ensure deficiencies do not result in serious or prolonged issues to the customer. C-Level classification will be realized from any of the following: 1) Non-compliance to any F3 criteria, 2) Non-compliance to 13 or more F2 criteria 3) A total score less than 75%

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Criteria Weighting

Scoring/Weighting Each criterion has been assigned a weighting factor defined as follows:

F3 - A key MP&L process that is a fundamental requirement of the organization's operations. If an F3 criterion is not met, there is a high risk of interruption to the organization's and/or customer's operations and the likelihood of additional costs being incurred. There are 35 F3 criteria, each scoring three points, which represents approximately 30% of the total available score.

F2 - An MP&L process that has significant importance to the efficiency and effectiveness of the organization's operations. If an F2 criterion is not met, the organization’s performance and customer satisfaction may be seriously affected. There are 75 F2 criteria, each scoring two points, which represents approximately 43% of the total available score.

F1 - An MP&L process that demonstrates ongoing control of operational processes contributing to the organization's overall competitiveness. If an F1 criterion is not met, the organization’s long-term sustainability and competitiveness may be negatively impacted. There are 96 F1 criteria, each scoring one point, which represents approximately 27% of the total available score.

Automotive: MMOG/LE from anOEM's PerspectiveTerry Onica – Director, Automotive, QAD

QAD Global Support for MMOG/LE

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The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

Safe Harbor Statement

QAD Global Support for MMOG/LE

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• Process maps• MMOG/LE reviews• QAD answer sheet• WWW.Qad.Com/mmogle

QAD Global Support for MMOG/LE

QAD Global Support for MMOG/LE

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Receiving Process Map Example

QAD Global Support for MMOG/LE

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• Review MMOG/LE 35 F3 and top 20 OEM criteria• Review processes, procedures and work

instructions • Presentation of findings to management

MMOG/LE Review

QAD Global Support for MMOG/LE

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QAD MMOG/LE Answer Sheet

QAD Global Support for MMOG/LE

Menuitem

OEMSpecifics

Probing ProcessMap

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Metrics Affected

QAD Global Support for MMOG/LE

Business Strategy QAD Solutions

Reduce reliance on spreadsheets

.NET UI, Browse and Reporting, BI

Reduce reliance on spreadsheets

.NET UI, Browse and Reporting, BI

Improve efficiency of customer relations

JIT, MEW, Configurator, CRM, Consignment, TMS, WMS

Process re-engineering Process Maps, Services

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• Check out WWW.Qad.Com/mmogle• Download

- MMOG/LE Products and Services brochure- MMOG/LE white paper- Automotive On-Demand and SCP brochures

• View- Short video on process maps- Testimonials - Presentations from past MMOG/LE seminars- Request QAD MMOG/LE Answer Sheet-

Next Steps

QAD Global Support for MMOG/LE

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• Dan Howe GM Dan.Howe@gm.com• Terry Onica tjo@qad.com

Questions & Answers

QAD Global Support for MMOG/LE

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www.qad.com© QAD Inc