{"id":7390,"date":"2019-02-12T08:23:42","date_gmt":"2019-02-12T16:23:42","guid":{"rendered":"https:\/\/blog-prod.qad.com\/blog\/?p=7390"},"modified":"2022-02-23T15:27:20","modified_gmt":"2022-02-23T23:27:20","slug":"auto-industry-proposing-to-ramp-up-electronic-communication-in-the-supply-chain","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2019\/02\/auto-industry-proposing-to-ramp-up-electronic-communication-in-the-supply-chain","title":{"rendered":"Auto Industry Proposing to Ramp Up Electronic Communication in the Supply Chain"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”7391″ img_size=”full”][vc_column_text]In 2019, the Automotive Industry Action Group (AIAG) and Odette International will be releasing the fifth revision of the global Materials Management Operations Guideline\/Logistics Evaluation (MMOG\/LE). <\/span>MMOG\/LE<\/span><\/a> is a comprehensive self-assessment required by many OEMs and leading Tier 1 suppliers. The automotive industry uses MMOG\/LE in the supply chain to evaluate supplier delivery readiness for new business and ongoing production requirements.<\/span><\/p>\n

Changes to MMOG\/LE<\/span><\/h2>\n

Because the automotive industry is going through such dramatic <\/span>transformation and disruption<\/span><\/a> today and into the future, it is not surprising that the new version will bring more attention to managing lower tier suppliers. The Supplier Interface chapter, which is one of six chapters in MMOG\/LE, went through the most significant changes in the new version. This chapter focuses specifically on best practices that an organization should consider when managing sub suppliers. In the new version, this chapter will provide more emphasis on performance, risk assessment, contingency planning, communication, assessing and evaluating sub suppliers. \u00a0<\/span><\/p>\n

One of the key best practices in the Supplier Interface chapter, which will be further strengthened, is the requirement for electronic data interchange (EDI) and\/or Web-based communications with an organization\u2019s supply base. In the new version, the proposed criteria states the best practice is to \u201cstrive to achieve electronic data exchange with 100% of its’ supply base.\u201d This means it is no longer acceptable to utilize EDI and\/or Web-based communications based on a critical commodity, high purchase value or part volume. Instead, it means an organization must make every effort to communicate electronically with <\/span>all<\/span> suppliers.<\/span><\/p>\n

The Power of an EDI Program<\/span><\/h2>\n

EDI has been at the core of the automotive industry for many years. In fact, I started my career implementing EDI with Ford suppliers and then moved to Johnson Controls to do the same. I was able to see firsthand what this technology could do for the customer, and equally as important, what it could do for the sub suppliers. Sub suppliers might not understand the initial value, until customers stop calling to follow up on parts or the sub suppliers no longer have to manually receive or locate schedules. As the program matures, both the customers and sub suppliers are more able to avoid premium freight and enjoy faster visibility into demand. All of this leads to inventory reduction for both the customer and supplier. At this point, sub suppliers become some of the organization\u2019s best cheerleaders for electronic communication with their customers.<\/span><\/p>\n

Even today, many organizations look at the time and effort it takes to implement an EDI program with suppliers, yet they fail to see the true dollar savings that will come, and so many give up before they even start. Inventory savings is a guarantee. This should be the prize you focus on with a supplier EDI program. If your organization has too much or too little inventory, I suggest doing two things:<\/span><\/p>\n