Three DaimlerChrysler initiatives illustrate how different order-to-delivery projects can complement one another.
DaimlerChrysler (daimlerchrysler.com) wanted a way to issue production requirements from its assembly plants to suppliers faster and accurately. For example, traditionally, the automaker fed its requirements for seats to a Tier 1 seat supplier.
That supplier passed the information to the Tier 2 leather supplier, and so on down the supply chain. It typically took 14 days for information to reach the Tier 4 supplier.
Compounding the problem, the information became truncated as it moved from supplier to supplier. So the supplier on the bottom rung got eight or nine weeks of planning data, while the Tier 1 received a year's worth of the information.
The automaker's Supply Network Collaboration pilot has improved factory-to-supplier communications. DaimlerChrysler uses Web-based supply chain management tools from software vendor Manugistics Group Inc., which had sales last year of $310 million.
On same page
"We're just trying to get them all on the same page at the same time," said Greg Wise,
supply manager for the Chrysler group's e-Extended Enterprise.
Suppliers using the Web-based Supply Network Collaboration hub simultaneously obtain information and alerts from DaimlerChrysler. What had been a two-week process is condensed to one day.
DaimlerChrysler piloted Supply Network Collaboration last year with one assembly plant and 10 supplier locations. It has expanded to five assembly plants and 17 supplier locations.
The automaker has pinpointed 25 to 30 supply chains that it wants to use the hub this year, Wise said.
"We must identify the right supply chains," he said. "We want suppliers with a deep supply chain, with Tier 3s and 4s."
Supply Network Collaboration is most effective if DaimlerChrysler feeds suppliers the best forecast of what it plans to build. So the automaker has introduced a pilot called Integrated Volume Planning with i2 Technologies Inc. (i2.com), a Dallas company with sales last year of $985 million, that will use vehicle sales information from its regional field offices early in production planning.
The idea is to create a more accurate production schedule for assembly plants. That, in turn, will help suppliers to better map their own production plans. "The closer we can align the forecast to what we build, the more accurate flow of parts we've got coming into our plant," said David Hodgson, Chrysler group vice president of worldwide supply. "It allows our tiers of suppliers to stop stockpiling banks worth of inventory or buying extra capacity."
DaimlerChrysler determines plant production by sequentially analyzing plant capacity, fleet orders and sales estimates. But with i2 Technologies software, all of these planning elements will be considered together using a Web-based system, including actual sales from regions.
More sunroofs, please
So if DaimlerChrysler plans to build 20 percent of its 2003 Dodge Neons with sunroofs, but sales at the dealerships indicated that 40 percent of Neon buyers want sunroofs, the automaker can roll that into the planning equation.
"The system, as we gain that information electronically from the dealers, sets an alert off saying, hey, you've got more orders than you can build, you have a capacity issue," Hodgson said.
DaimlerChrysler can determine if it needs to buy more tooling early in production planning. When information is issued to the sunroof supplier via Supply Network Collaboration, that company can decide whether it needs another shift or additional tooling, he said.
The Integrated Volume Plan-
ning pilot is in the automaker's truck plants in Warren, Mich.; Saltillo, Mexico; and St. Louis. Dai-
mlerChrysler expects to have it in all plants by mid-2003.
DaimlerChrysler also is concentrating on logistics, having
formed Insight Network Logistics
(insightnl.com), with Union Pacific Railroad (up.com).
The company uses VinVision tracking technology, developed by Union Pacific and a subsidiary, Transentric, to follow shipments of Chrysler group vehicles via the Internet from assembly plants to dealers. The software immediately identifies shipments that have deviated from their original transportation plan.
DaimlerChrysler builds about 14,000 cars and trucks a day at 17 assembly plants. They are shipped by rail and truck to 4,000 dealers, mostly in the United States, Canada and Mexico.
Before last August, it took 12 days to get a vehicle from the factory to the dealership. It is down to 10 days. The goal is six.