Maintaining a standard of performance for materials that flow across extended supply chains is critical to maintaining a thriving global automotive industry. One way to ensure that flow is by assessing an enterprise’s best practices in logistics.
The Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE) is one such established method for making such a judgement. Developed by the Automotive Industry Action Group (AIAG), the MMOG/LE is a proven, industry-accepted tool that measures and improves materials management and logistics efficiency in manufacturing.
MMOG/LE reduces supplyrelated delivery risk. The process helps suppliers uncover where operations need improvement. The suppliers’ operations are scored and a gap analysis is generated so that improvement can begin.
AIAG and its sister organisation in Europe, Odette, revise MMOG/ LE at least every three years to ensure it reflects the emerging needs of the global automotive industry. MMOG/LE recently underwent an extensive review and enhancement; the global team responsible for updating MMOG/ LE to Version 3 incorporated more than 130 requests from around the world.
OEMs typically audit suppliers for poor delivery or service rates and new product launches. Because of MMOG/LE’s proven effectiveness, the list of OEMs and major tier one suppliers supporting its use is growing. Version 3 is currently available in English, Chinese, Korean, and Spanish, and will soon add eight more languages including German, Turkish and Portuguese.
Simply good business
In the past year, economic conditions worldwide have posed challenges in capacity, volatile schedules, supply chain visibility and workforce reductions. MMOG/LE helps address these by ensuring customer EDI data is integrated throughout ERP or the planning system from the time EDI is received until the final shipment is made. It ensures that resources and planning volumes are compared to customer requirements upon receipt of electronic forecast requirements. It also assesses how sub-suppliers receive electronic schedules and send electronic ASNs. Finally, inventory is tracked for all locations (such as scrap, reject, returns, containers, WIP).
Suppliers who have deployed MMOG/LE have reported reduced inventory-carrying costs of 25-50%. Other benefits include reducing premium freight costs up to 85%, reducing obsolescence costs up to 80%, improved delivery rating by 10-15% and reduced new employee training costs by 50%.
A global survey of suppliers currently using MMOG/LE found that data accuracy is a benefit, too. The use of ERP or a planning system brings uniformity to the data capture and communication, as well as a means of tracking the accuracy of the data and how it was calculated.
A supplier can have the best technology or the lowest price; but if the company can’t deliver product on time, it will lose customers and money. MMOG/ LE gets accurate information in the hands of customers, suppliers, and employees in real-time, ensuring improved delivery performance. And that’s just simply good business.