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Lean manufacturing and globalization drive changes

General Motors is still at the beginning of its supply chain transformation, in spite of the improvements it has already made over the past two-and-a-half years, according to Brad Ross, the carmaker’s executive in charge of order-to-delivery (OTD).

Presenting the keynote speech at the Autologistics Global 2003 conference in Birmingham, Michigan, Ross stressed that significant changes had been made to internal culture, IT and overall OTD performance to ensure better service to dealers and customers.

Order lead times have been reduced by 60%; delivery date reliability now stands at 90%; there is 99.99% material availability to lineside workers; damage-free delivery has increased to 99.5%; restraints in the system to deliver exactly what customer want have been cut by 98%; work in progress inventory is down by 18%; and logistics costs have been cut by 14%.

“Today, some of the results clearly demonstrate the ability to achieve some better performance in those areas, but that is not where we need to be,” said Ross. “We have only just begun to really know how to get integrated, to begin to know how to collaborate, to really begin to know how to put the most effective IT in the right place to drive the kind of results that we need.

“We are coming from an environment which had characteristics such as long lead times, large finished goods inventories, no delivery date reliability because there were no promises, and many customer and dealer constraints that were extremely frustrating for both monthly and weekly cycle times. In addition, there were information pressures, cycle times around business processes that were driven off meeting architectures that were close to what market needs are and a not very well integrated customer relationship management process across the company.”

But the work achieved to date through OTD means that GM does have a “strong foundation” on which to build. “We look forward to improving it dramatically in the near future because we have got no choice. The market is not going to let us stand still like this and so we have got to take that next step and we are trying to do that here with your help,” he told service providers among the 160 delegates at the event.

Ross said that the focus for GM remained the development of “gotta have products” and increasing its market share, but that the pressures of globalization, customer expectation and management of its relationship with suppliers meant that improvements in logistics – “the glue that keeps these things together” – were a necessity.

He explained that GM’s OTD process encapsulates the whole chain to get vehicles to dealers to customers at the right place, at the right time and at the right price. “It’s kind of trite. Quite honestly it is simple to say, but it is very difficult to do and it is something that you don’t just take for granted.”

Ross stressed the importance of building to plan everyday in creating rhythm throughout the supply chain and producing what customers want in a timely fashion. He also emphasized the role GM’s Vector SCM joint venture 4PL plays as an “enabler” not only for its transportation strategy but also its overall OTD strategy: “from supporting supply chain design activity to lead time reductions throughout the network, to cost reduction, to intelligent engineering of networks and developing our partnerships.”

Tom Jones, senor automotive VP for Ryder, took the opportunity of speaking at Autologistics Global 2003 to announce his company’s new Ryder Logistics Release product, which will target the estimated 10-20% savings available by combining networks across the supply chain.

Jones acknowledged that network collaboration is a recognized opportunity for cost savings as well as service and frequency improvements but said that a failure to communicate is a major block.

“”The biggest problem we have is that a lot of this is really on an ad hoc basis,” he said. “It’s really difficult to systematically combine networks. There are a variety of reasons, but primarily because they operate in different communication systems or different product systems across the various enterprises that are connected.

“There’s really no overall logistics plan that takes into account all of the various providers – you’ve got a 3PL, a carrier, a Tier 1, a Tier 2 and an OEM, and many times the logistics plan is really predicated on the manufacturer’s or supplier’s communication and leaves out all the other key components and there are many different documents that are created and involved also with the actual shipment.”

Ryder’s research showed that up to 30 different documents are created every time a shipment moves. “And many of them, in fact most of them, are not really interrelated and don’t carry off of the first document that was actually created, so there’s not a lot of continuity,” added Jones.

Ryder Logistics Release addresses this issue by automatically synchronizing the material release with inventory requirement and a broad logistics network to produce a logistics plan for every part.

“We have taken the material release, put it into a central repository and created an automatic, seamless and universal release mechanism that is very applicable, especially to the tier market where a lot of the releasing activity is very fragmented and is not systematic,” said Jones.

“It touches the same players with the exact same data, the exact signal and the same focal point, which is the material release. And it is automatic and it is seamless.”

Sessions at Autologistics Global 2003 covered areas including lean manufacturing, globalization, suppliers’ supply chains, service parts, information technology and finished vehicle logistics, with speakers from companies including Ford, Toyota, DaimlerChrysler, Audi, Robert Bosch, Delphi, Johnson Controls, Penske Logistics, Schneider Logistics, TNT Logistics and Menlo Worldwide.