Lean Supply Chain for Automotive: Realizing the Vision

Lean Supply Chain for Automotive: Realizing the Vision [2.3M]
Gary Flum, QAD
Tuesday - 1:30 p.m.

The impact of growing global industrial competition places a premium on the ability of companies to manufacture and deliver products that meet exact customer requirements. To produce and deliver these products precisely when and how the customer needs them is driving planning for production and replenishment to use smaller numbers of production units and more finite increments of time. This presentation discusses the trends seen in the deployment of Information Technology to meet these challenges.

In the past, weekly and/or monthly planning horizons were the norm. Typically, customers' orders were taken with the dates required for shipment reviewed and approved before any delivery commitments were made. When the struggle for markets grew more intense, specific agreements between customers and suppliers were established that locked in prices and gave assurances for quantities, but still permitted flexibility in commitments and delivery. Today, processes have evolved into arrangements where suppliers must commit to deliver a range of "configured" products in periods of time measured at most in days but more typically in hours or even minutes. Customer requirements are now expressed in terms of Just-In-Time delivery or Kanban signals, communicated using EDI or production requirement's "broadcast," directly from the assembly line, that detail the exact variety of product required and the time, down to the minute, that it must be delivered.

The immediate affect of these developments is the trend for the supply chain to maintain higher levels of inventory to "buffer" against the varying requirements and production planning. This practice leads directly to excessive quantities of material and obsolete items in stock that ultimately have to be written-off because of the inability to execute inside the time allowed. Furthermore, the last minute requirements for unique product configuration make scheduling very difficult, which compounds the issue when passed to suppliers the next level down.

The fundamental challenge confronting companies operating in these environments is meeting their customer expectations while maintaining reasonable profit margins; specifically, keeping direct costs (material and labor) and indirect expenses (overhead representing labor, inventory carrying costs and write-offs) to a minimum. QAD has developed a unique configuration of products that directly address these challenges through the integration of its well established production and replenishment planning capabilities with execution oriented functions found in its Lean and JIT Sequencing modules. This presentation provides details about these execution based capabilities and strategies for how they can be deployed in your operations.