One Network Enterprises Auto Oem Wp 2014 (1)

7/24/2019 One Network Enterprises Auto Oem Wp 2014 (1)

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One Network Enterprises | www.onenetwork.com

WHITE PAPER AUTOMOTIVE INBOUND SUPPLY BEST PRACTICES

Automove Inbound

Supply Best PraccesExploring the Network Model


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2 One Network Enterprises. All rights reserved.


AUTOMOTIVE SUPPLIER PROCESS ANDPERFORMANCE REQUIREMENTS

Supply chain organizaons within the automove supplier

industry contribute to manufacturing excellence in many

ways, including quality, cost and delivery, to their OEM

and subsystem customer base. Focused on outcomes, a

compeve supply chain capability not only assures the on-

me delivery of component material, but also the execuon

of inbound supply to ensure the shipment of quality nished

goods at a compeve price while delivering on-target

margins for the manufacturers.

In order to accomplish these goals, connuous improvement

in global supply chain execuon becomes a core supply

capability required by most automove OEMs today.

Strategies around lean replenishment and logiscs must be

deployed to accomplish performance goals, many of which

may be required to remain in good standing. Execung these

strategies requires manufacturers to fully leverage the

potenal of todays innovave network-based supply chain

systems and processes.

Today it is possible to fully engage the knowledge and

capabilies of an extended enterprise across their supply

chain in real me. This evolving network-based capability

provides the potenal to drive signicant improvements in

overall replenishment performance and cost goals.

A number of comprehensive business process and supply

chain specicaons designed for the automove industry

are in use today, including the TS16949 standards (related to

ISO 9001) and the AIAG Materials Management Operang

Guidelines (MMOG). As with most industry based eorts, the

intent is to basically follow Demings recommended approachto process excellence, which is to implement standard/

common/repeatable process, measure process performance,

reduce process variability, and connuously improve those

processes over me. In fact these two parcular eorts are

typically referenced in supplier contracts as compliance

requirements. The MMOG for example includes a graduated

severity index, F1 through F3 which dene a set of processes

and interacons within a supply chain relaonship which

must be adhered to with frequent measurement and

reporng. A poor grade can result in signicant contract

ramicaons.

The following is a breakdown of the crical supply chain

capabilies and acvies that should be in place within an

automove supplier organizaon to comply with todays

customer contract requirements and to execute perfect

supply fulllment:

Lean manufacturing, replenishment, and logiscs pracces

Establishment of replenishment processes, procedures, and

policies to assure on-me delivery at the highest level of

quality and lowest possible cost throughout the extendedsupply chain

Electronic communicaon between suppliers and

customers (zero latency preferred)

Demand analycs around EDI transacon sets 830, 862,

866, as well as any web based electronic communicaon

Automove Inbound SupplyBest Pracces


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Real me collaborave communicaon throughout the

supply chain to address potenal issues in meeng

demand requirements

Ability to react to weekly schedule variaon, reconciling

Cums and comparing demand to capacity

Ship according to a latest set of transportaon

roung instrucons

Real me response to alerts, issues, and excepons

Repeatable processes that minimize human intervenon

including connuous process measurement and reporng

Idencaon and measurement of key trending metrics on

a weekly or monthly basis, with an emphasis on correcve

acon planning to address metrics that dont meet goals

From a measurement perspecve the key trending metrics at

a high level include:

Supplier on me delivery

Supplier shipment informaon accuracy

Supplier ASN compliance

This paper will focus on applying these crical supply

capabilies to the automove inbound supply poron

of the supply network. This is dened by an automove

Subsystem or Tier 1 Supplier driving demand upstream to

their Tier 2 suppliers. It is recognized that some suppliers to

the automove OEMs may use dierent terms or denions

to describe the various nodes that provide subsystems,

assemblies, components, or parts downstream toward the

end consumer. The naming convenon used seemed the

most popular and doesnt limit in any way the node to node

network-based funconality.

A NETWORK MODEL DRIVES INCREASEDPERFORMANCE AT LOWER COSTS

Implementaon of these crical supply chain capabilies

has been underway for quite some me in the automove

supplier market. As menoned above, signicant eort has

been put into guidelines like the MMOG to measure and

improve the performance of those capabilies.

Unfortunately we are typically trying to improve those

capabilies based on the wrong foundaon. ERP by denion

is an Enterprise based architecture. When faced with the

supply chain requirement, ERP responded based on the way

the architecture was designed, namely connecng nodes

in a sequenal fashion and protecng the inherent batch

ineciencies through long lead mes and freeze schedules.

Plus as we painfully came to realize, ERP is far from being

standard, even if we deployed the same vendor soware at

mulple locaons or nodes in our supply chain.


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Network Model at a Glance

Each supplier is connected to a shared

network plaorm

Single version of the truth with shared processes,

data, excepons, and metrics

Global visibility, process management, and reporng

Support for mul-er processes and visibility

One user interface regardless of back-end ERP system

In fact our supply chains arent really chains at all, they are

logical networks comprised of mulple enterprises and

trading partners operang across mulple physical ers whoneed visibility across the network to orders, shipments, and

inventory. These network parcipants also require a highly

secure, permission-based roles capability, governed by their

trading contracts, to interact with the supply network to

ensure that it operates without disrupon while incurring

the lowest costs. These trading partners include customers,

suppliers, contract manufacturers, 3PLs, 4PLs, carriers,

warehouse operators etc.

Today we do an incredible amount of work trying to execute

against these crical supply chain capabilies. It is a losingbale if we are execung based on an architecture designed

to do something else. Given that our requirement space

has now been redened as a supply network comprised

as a mul-party, mul-echelon environment, we need an

architecture designed to match that requirement which

is capable of driving a much higher level of visibility and

problem resoluon across that network.

Just think about the benet of reducing latency alone.

Whether the demand is for producon parts or aer market,

we know there will be some level of forecast error. Whyaccept all the informaon delays related to ERP node to node

processing and the related lack of visibility when a supply

network can operate in real me, eliminang this latency,

and providing full network visibility based on the secure

permissions framework?

Automove Subsystem and Tier 1 customers are requiring

that their Tier 2 Suppliers generate process innovaon around

lean manufacturing and logiscs. A network based supply

chain soluon that operates in the cloud where mulple

pares can subscribe and parcipate in transacons on a

real me basis will provide the plaorm for this innovaon.

While eorts like the MMOG are commendable, the

potenal results will follow the law of diminishing returns

if those guidelines are being applied to tradional ERP type

architectures.

Even the tradional EDI layer is laden with ineciency. Why

implement an enre point to point EDI framework when the

integrity and structure of the EDI transacon set can easily be

translated into a network-based supply soluon and be made

available across all subscribed trading partners? As part of the

network soluon, a Tier 1 supplier could operate a transacon

in concert with a Tier 2 supplier based on managing the state

changes of an order.

In fact our supply chains arent really chains at all, they are logicalnetworks comprised of mulple enterprises and trading partners

operang across mulple physical ers who need visibility across

the network to orders, shipments, and inventory.


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Expected Network Benets

Inventory Reducon

Drop in stock-outs

Improvement in On-me Delivery Reduced Cycle Time

Improved Supplier Payment Process

Reduced Operaonal Expenses

For example if the trading partners are operang a Min/Max

replenishment policy and the Tier 1 wants to prevent early

shipments which inate their inventory posions, they cancontrol the ASN such that they do not allow the Tier 2 to issue

the ASN if it is going to violate the Max inventory seng. This

transacon is represented by the procure to pay cycle.

Why try to understand and improve the performance of the

procure to pay cycle by recombining mulple transacons

across mulple systems when we can simply implement

a single transacon across mulple trading partners who

control the transacon by managing and reacng to state

changes within the transacon through a permissions

framework?

These transaconal state changes provide trading partners

the ability to control a transacon and address excepons

prior to execung a transacon that would have produced a

poor outcome given policy violaons or changing condions.

Thus at any point in the procure to pay transacon cycle,

whether it be sending the PO, acknowledging receipt,

comming the order, creang the ASN, order pick up, order

in transit, order scheduled to factory, order delivery etc.,

visibility and control is provided across trading partners based

on their permissions framework which is based on theirtrading contracts and easily set up as part of their network

subscripon.

Thus, the old and red ERP blueprinng process is now

a thing of the past. No longer do we have to change our

processes to accommodate the technology. Today our

technology provides us with a tunable system of control

across mulple trading partners across mulple trading

echelons. And not only is there signicant benet in

improving supply chain performance and lowering costs, but

these newer network technologies are subscripon based

through a cloud architecture, which signicantly lowers TCO,

along with providing much more exibility in deploymentwhere individual processes can be implemented and

integrated to the legacy environment rather than having to do

a big bang approach.


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FORECASTING AND DEMANDMANAGEMENT

For the purposes of this paper, the procure to pay

inbound supply cycle starts with forecasng and demand

management. A contract management capability could be

discussed as a precursor, but the Tier 2 supplier contract

structure is embodied as part of the process descripons

found in the balance of this paper. There is of course a more

interesng discussion around contracts related to the trading

relaonship between the OEM and their subsystem suppliers,

but this will be addressed in a later paper.

The 830 forecast/material release will grant fab & raw

authorizaons per the commercial terms between the

Subsystem or Tier 1 Suppliers and their Tier 2 Suppliers. (For

those involved with PDM related to aermarket components

they may also need to consider addional standards such as

ACES and PIES.)

Tier 2 Suppliers will be granted raw and fab authorizaons

in concert with the authorizaon being provided by the end

customer. For example, a Tier 1 supplier may grant 6 weeks

raw and 3 weeks fab, for a total of 6 weeks. Thus the Tier

2 supplier is authorized to convert 3 weeks of the raw (not

carry an addional 6 weeks raw). This authorizaon will be

provided to the suppliers via EDI in their 830 releases. Certain

commodity materials will be released using a modied set

of standards. In addion to EDI and especially for many

small and mid-size Tier 2 suppliers, web based electronic

communicaon is a viable alternate when properly staged

within a state-based transaconal process.

The Subsystem or Tier 1 Suppliers may or may not require

the Tier 2 Suppliers to ship according to the forecast release.

In some cases the forecast release does serve as the deliverysignal. Alternavely in other cases (i.e. electronic contract

manufacturers), they may for example receive periodic

forecasts via e-mail which would forecast aggregate quanes

over a predetermined horizon. Priority would be given to this

central forecast to drive component planning/purchasing

in order to meet the delivery signals sent by the collecve

manufacturing plants. In this case the central forecast would

override any EDI 830 forecast data sent by an individual

manufacturing plant.

The authorizaon on a release is the Subsystem or Tier1 Suppliers nancial commitment for released material.

However a key point is that the authorizaon for a Cum

amount may not cover the material required to cover the

lead-me related to the shipment. In some cases the supplier

will need to begin manufacturing without authorizaon if the

amount of lead me between recognion of an order and

receipt of the order (can include manufacturing me as well

as transportaon me) is longer than the Cum window.

For example if lead me is 6 weeks but the Cum authorizaon

is for 4 weeks, the supplier will operate with some risk.Thus we can already see the importance and impact of

excessive lead me in the system. The supplier contract calls

out for capacity ex since we know there is variability related

to both volume and mix. Using tradional ERP based supply

chain architecture cannot provide the visibility and control to

improve performance in this area.


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SHIPMENT AUTHORIZATION,REPLENISHMENT, AND ORDER

AGGREGATIONShipment authorizaon will be communicated to the Tier 2

supplier through the Subsystem or Tier 1 plant designated

replenishment policy. Eecve inventory replenishment

policies in use today include the 830/862 converted to a

delivery release, KanBan, Min/Max, and Sequencing. Spot

buys may be used as well during product launch

or pre-producon.

Using the 830/862 basically constutes a push schedule from

the supplier into their customers manufacturing operaon.

Truckload opmizaon is simpler under this technique, but

a price is paid in excess and obsolete inventory. Improved

technologies now provide the ability to opmize truckloads

simultaneously with inventory using pull policies. In fact

under todays prevailing strategies around Lean, many

companies are implemenng technologies that will allow

them to move from push to pull. Major automove

Subsystem and Tier 1 Suppliers are actually including

statements to this eect in their 10k lings.

KanBan, being one of the simplest pull policies, is designed

to pull supply based on a rate of consumpon. The KanBan

binning technique is designed to provide discrete quanes

the supplier must monitor and use to calculate required

shipment quanes.

Min/Max, a more exible pull policy, provides a range of

acceptable inventory levels the supplier must monitor and

use to calculate their required shipment quanes. Supply isdone dynamically based on a consumpon rate, and therefore

addional consideraon can be made for transportaon

opmizaon under this policy.

And nally Sequencing is designed as an hourly or shi based

replenishment technique where data is sent to suppliers

to priorize shipments. This method is commonly used

when suppliers make mulple deliveries in the same day

to a given site.

Using these types of standardized inventory replenishmentpolicies allows customers to reduce supply chain variability,

opmize inventory levels and minimize freight expense.

Typical measurements include inventory turns, truck

ulizaon, and premium freight reducon. Unfortunately in

order to provide this type of funconality most ERP vendors

must use plug-ins that are not integrated as part of the

transaconal ow.

However when these types of replenishment policies are

included as part of an overall supply network iniave, the

customer will also enjoy full internal and external visibilityof component parts based on a technology plaorm which

supports both an automated and an interacve capability

to enable full electronic commerce, including the ability to

communicate replenishment signals across the global supply

network in real me.

Using tradional ERP based supply chain architecture cannotprovide the visibility and control to improve performance.


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A complicang factor for a Tier 1 supplier will be that under

this mul-policy replenishment environment, it is possible

that the Tier 2 suppliers serving a parcular customer couldreceive replenishment signals being driven by dierent

replenishment policies across various receiving plants, or a

single plant could be using mulple replenishment policies

across a varied group of suppliers. In a tradional point to

point policy and communicaon architecture this would be a

dicult scenario to manage. In the type of subscripon based

network environment we have been discussing it actually

becomes quite simple, especially given that technology is now

available to handle all the heavy liing.

Although many factors are considered when choosing properreplenishment policies, primary consideraon is typically

given to the specic lean manufacturing strategy being

deployed, the variability of customer demand, and the overall

logiscs footprint in terms of delivery lead mes.

To determine the opmal replenishment method to use for

each component, manufacturers have tradionally adjusted

on an annual basis or when operaonal or supply chain

condions shi (i.e. when a supplier moves producon to

another locaon that is geographically dierent than the

exisng supplier locaon).

A beer method would be to use recent and historical

performance and outcomes to adjust replenishment policies

in order to improve performance. Using the power of an

advanced network plaorm, it is possible to select from an

improved set of policies, while also implemenng automated

excepon handling at increasing levels of precision. In

addion inventory planning can be invoked which helps

establish target inventory levels within the policies based on

variaons and lead mes.

Order aggregaon follows immediately aer a replenishment

policy has established a recommended set of orders.

Suppliers who ship either in truckload quanes or as part

of a milk run may be requested to ulize future forecasted

demand within their 830 authorizaons to ll alloed space

on the designated carrier. The supplier should ulize future

demand from material according to priority level, e.g. a part

with addional demand 2 days out should be used before

demand showing due 2 weeks out. When there is a choice,

the supplier should always ship the higher runner rst.Suppliers not lling their allocated space are somemes liable

for freight costs associated with lost ulizaon opportunies.

In this case pulling ahead in order to ll a truck will not

result in an over-shipment penalty. Manual replenishment

may be approved when it is not possible to use one of the

manufacturers designated replenishment methods.

Once order aggregaon has completed and an approved set

of orders exists, the delivery signal will show either a ship

date or a delivery date. A delivery date denes when the

goods are to be ulmately received by the Subsystem or Tier1Supplier rather than being delivered to the carrier. A ship date

indicates the date which the supplier should ship the goods.

The Tier 2 Supplier is expected to understand transit me and

have product ready for shipment in order to meet the delivery

date on the schedule, inclusive of transit me.

Using the power of an advanced network plaorm, it ispossible to select from an improved set of policies, while also

implemenng automated excepon handling at increasing

levels of precision.


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Further, the Tier 2 Supplier is required to:

Provide visibility and control within their processes toassure that their physical shipments correspond with

their customer demand. Full WIP tracking inbound to

a customers manufacturing operaon is a standard

requirement which could extend to include WIP tracking

within a manufacturers facility.

Run capacity planning inclusive of the typical contractual

requirement to ex throughput in order to meet either a

20% week to week net schedule increase or a 20% cum

increase over the period authorized under the 830 release.

Collaborate with the plant Materials Representave in

real me if unable to meet the replenishment schedule.Query the Supply Network and be prepared to supply the

following informaon:

Date the parts will be available

Plan to get back on schedule and resolve any delivery

issues including resources, transportaon, material, and

capacity

Determine whether an established window will be

missed or a release schedule cannot be met. Determine

whether an expedited shipment would be necessary

Collaborate with the Subsystem or Tier 1 supplier to

obtain approval for the mode & carrier chosen. If the Tier2 Supplier is responsible for the scheduling issue, then

in many cases the freight would be shipped PREPAID

with the Tier 2 Supplier choosing the logiscs provider.

In this situaon the Tier 2 Supplier is responsible for

tracking the in-bound freight to their customer, and

providing shipment status visibility to the plant Material

Representave

A Tier 2 supplier may be held responsible for customer

downme and other associated costs (i.e. premium freight

or charter costs) due to their inability to meet deliveryrequirements, in accordance with the purchasing terms

and condions. If a Tier 2 Supplier is behind in their ability

to meet a required Cum, a typical scenario would be that

the subsystem or Tier 1 supplier would expect the supplier

to have the Cum caught up by the Monday following the

authorized lead me to produce the parts.

Given these exacng requirements, every automove

supplier needs to consider the advantages of the newer

network-based architectures. These types of requirements

are becoming common in every supplier contract. It is notpossible to comply with these requirements, as listed above,

without considerable expense, ineciency, and inevitably

discrepancies and penales.

Most manufacturers will strive to produce one common

material planning and logiscs evaluaon that can be used by

both the suppliers and customers throughout the product life

cycle, including the early development phases. As menoned

earlier the MMOG guidelines are popular in the automove

supplier space and are somemes prescribed by the

customers onto the suppliers as a supplier self-assessmenttool. In order to drive both compliance and performance to

new levels, a beer approach should be considered.


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ELECTRONIC COMMERCE

EDI (Electronic Data Interchange) is required to be ulized by

most automove suppliers throughout the supply chain. This

includes the ability to receive releases (830 - weekly, 862

daily), and send ASNs (856).

Guidelines in this area have been established by the

Automove Industry Acon Group (AIAG) / VDA. Supplier

infrastructure will typically interface with one of the following

opons:

Tradional EDI package

Visibility tool

3rd party EDI provider

Suppliers must also develop conngency plans for their

primary EDI system given that delivery disrupon will most

likely result in missed commitments and potenal contract

violaons.

As menoned above, the EDI infrastructure should not be

divorced from the transaconal infrastructure. Transaconal

outcomes and process execuon will dene performance.

Why implement a standalone EDI infrastructure when the

EDI standard can be accommodated as part of the governing

order transacon through state based control?

The ASN is the electronic transfer of shipment data from

a supplier to a customer. Tradionally the customer plant

ulizes the informaon contained within the ASN in three

ways:

Determine and conrm goods in transit

Vericaon against the shipment as product is received

Generaon of an electronic invoice for supplier payment ifthe supplier is ERS (evaluated receipt selement) approved.

This way of thinking about the ASN does not maximize the

supply opportunity around cost control. Tradional soware

soluons do not allow for the case where if the trading

partners are operang a Min/Max replenishment policy and

the Tier 1 wants to prevent early shipments which inate

their inventory posions, they can control the ASN such

that they do not allow the Tier 2 to issue the ASN if it is

going to violate the Max inventory seng. This transacon

is represented by the procure to pay cycle. Why try tounderstand and improve the performance of the procure

to pay cycle by recombining mulple transacons across

mulple systems when we can simply implement a single

transacon across mulple trading partners who control the

transacon by managing and reacng to state changes within

the transacon through a permissions framework?

These transaconal state changes provide trading partners

the ability to control a transacon and address excepons

prior to execung a transacon that would have produced a

poor outcome given policy violaons or changing condions.Thus at any point in the procure to pay transacon cycle,

whether it be sending the PO, acknowledging receipt,

comming the order, creang the ASN, order pick up, order

in transit, order scheduled to factory, order delivery etc.,

Suppliers must develop conngency plans for their primary EDIsystem given that delivery disrupon will most likely result in

missed commitments and potenal contract violaons.


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visibility and control is provided across trading partners based

on their permissions framework which is based on their

trading contracts and easily set up as part of their networksubscripon.

The ASN must be created upon nalizaon of the shipment

and be received by the customer plant within one hour from

the me the shipment leaves the suppliers shipping locaon,

or prior to its arrival at the manufacturing plant, whichever is

earliest.

Given the sensivity to meliness, all shis in a

manufacturing plant must be capable of sending the ASN

to meet these requirements. Suppliers will be able toconrm customer receipt of the ASN if eecve network

connecons and visibility have been deployed as part of the

communicaon infrastructure. However receipt conrmaon

is not considered to be a successful transmission if certain

informaon is not included as part of the ASN.

Most manufacturers will require that the ASNs contain

accurate and mely informaon in the following areas: BOL

Number (Bill of Lading); Shipment date/me; Gross weight

of shipment; Net weight of shipment; Total Bill of Lading

quanty (e.g. # of cartons); Standard Carrier Alpha Code(SCAC); Mode code (e.g. E for expedite, A for air, etc.);

Pool point locaon (if applicable); Trailer number (or air bill

if its an air shipment); Packing slip number(s); Ship from

locaon (our supplier code or supplier DUNS Code); Ship to

locaon(s) (plant code(s) including dock code(s)) or DUNS

Code; Part number; Engineering change level (Part); Quanty

shipped; Unit of measure; Purchase order number; Number

of cartons shipped of each part; and Quanty per carton.

ASN accuracy is paramount given the importance placed on

the integrity of informaon related to inventory records,

supplier schedules, and invoice payments. Timeliness is

crical to informaon accuracy and funconality. Failure to

issue ASNs in a mely fashion will typically result in non-

compliance and the potenal for a charge-back. Visibility

and control related to accuracy and meliness, along with

an excepon-based framework that corrects issues prior to

them becoming problems, is what is required to nail the all-

important ASN poron of the order transacon.

INBOUND LOGISTICS REQUIREMENTS

Earlier we discussed the fact that the procure to pay

business transacon cycle includes transportaon events such

as tendering, pick up, in transit, dock scheduling and deliver

along with full track and trace. While there are a number

of detailed requirements listed below related to inbound

logiscs (which are fully complied with in the new plaorm

we have been discussing), the real key is that in addion to

opmizing transportaon and logiscs costs, we also want fullinventory visibility and control. Thus similar to EDI, logiscs

needs to be considered part of the transaconal ow, not a

separate set of funcons to be integrated.

Visibility and control related to accuracy and meliness, alongwith an excepon based framework that corrects issues prior

to them becoming problems, is what is required to nail the all-

important ASN poron of the order transacon.


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Considering the lengthy set of detailed Logiscs requirements

for an automove supplier list in the balance of this secon,one needs to wonder how an opmal level of analycs,

visibility, and control could have been provided using legacy

systems. As we all know it was not possible and thus we have

signicant ineciency in todays logiscs environment, maybe

not so much in the logiscs themselves, but in the value that

an integrated logiscs environment could bring to the overall

supply network.

Logiscs requirements include the determinaon of carrier

and related roung instrucons in order to eecvely manage

inbound freight through the consideraon of mulple factorsincluding supplier locaon, product volume, packaging,

transportaon costs, and lead me.

The expectaon that suppliers must share in the ownership

of the shipping process to ensure products are received in

a mely and cost eecve manner - essenally, at the right

me, in the right container, at the right shipping price, to the

right locaon require that they employ advanced analycs

and visibility.

And this isnt limited to process execuon. All supplier

shipments must be accompanied by appropriate

documentaon. Documentaon may include, but not limited

to, packing slip, bill of lading, NAFTA cercates, commercial

invoices, CMR (EU and Asia) and hazardous materials

informaon. Thus process outputs related to documentaon

must be error free.

Carrier informaon must also be included in the suppliers

Advance Ship Noce (ASN) transmission to allow fortrace-ability and to ensure supplier compliance to roung

instrucons. When electronic generaon of the ASN does

not exist the supplier is required to provide a faxed copy of

the shipping documents. As part of this process, suppliers

are responsible for contacng the appropriate carrier, freight

forwarder and customer materials personnel to ensure mely

pick-up and delivery. It is the suppliers responsibility to set


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shipping window mes in conjuncon with the manufacturing

plant materials personnel and the carrier to ensure delivery

by the date shown on the release. Thus leveraging thecarrier as part of the supply network, leng him subscribe

with appropriate permissions, and then giving him access to

schedule delivery appointments makes all the sense in the

world.

Informaon to be provided should include, but may not be

limited to, product availability, expected delivery me, special

instrucons, container dimensions, and weights. If shipping

less-than-truckload quanes to one ship-to locaon, each

skid must include a label indicang the plant name and

address. All suppliers will be required to prepare their packingslip(s) in a standard format and must be aached (glue or

tape) to the packaging (pallet shipment). The packing slip

must be in a pouch/sleeve that protects it but also allows

it to be removed by receiving plant. Rather than building

custom integraon to meet this requirements, subscribing to

the network make this informaon available, in the correct

format, in real me.

Content required in a specic format/locaon on the packing

slip include: Packing Slip #; Sold To info; Supplier Producon

Plant; Ship to; BOL #; Customer part #; Descripon; Supplierpart #; Quanty shipped; PO #; Footer which includes page

number and repeats the pkg slip #.

A separate bill of lading must be created for each ship-to

locaon, even when shipping on the same carrier. Each BOL

must contain a unique BOL #. The supplier BOL must include

the following:

Number of Packages and/or Handling Units - If packages

are consolidated on a skid, provide both package count and

skid count on the bill of lading. Descripon of shipment - Enter the descripon of each line

item. Please note the type of package (carton, tote, barrel,

etc.) and the quanty per package. Each line item must

include the correct Naonal Motor Freight Classicaon

(NMFC) Item # and Class. This informaon is crical to

ensure correct rang so as to avoid excessive charges.

Weight - Enter the total gross weight, in pounds, for each

line item. Include the weights of pallets, skids or any

secondary container.

Freight Terms Indicate FOB Origin, Freight Collect terms

if the customer is responsible to pay for the shipment.All freight shipped to customer facilies must be shipped

freight collect unless Purchase Order states otherwise or

shipment is a Supplier paid expedite or roung deviaon as

discussed earlier.

Whenever the customer is responsible for paying the freight

charges, a roung instrucon will be provided to the supplier.

The roung instrucon will include at least one primary

carrier and an expedited carrier, and is issued by each

customer receiving locaon.

Plant approval must be obtained from the receiving plant

materials personnel for any roung instrucon deviaon. Any

deviaon from the roung instrucons without customer

plant approval may result in a supplier debit to compensate

for excess freight charges and/or administrave fees.


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Any premium freight which results from a supplier event

will be managed and paid for by the supplier. Typically

the customer will not take responsibility for the set-up,management, tracking or payment of a supplier-caused

premium freight event. The supplier will communicate to the

plant all expedite informaon and provide milestone updates

to keep the plant informed on the arrival of the expedited

components.

Many Subsystem and Tier 1 Suppliers will reserve the right

to take-over the management of the premium freight event

if the supplier fails to communicate and eecvely manage

the event themselves. In these cases, the supplier may be

charged for their customers me.

When expeding freight at their customers expense,

authorizaon must be obtained by the supplier from

the appropriate receiving plant materials personnel.

Unauthorized expedited freight may result in debit to the

supplier to compensate for excess freight charges and/or

administrave fees.

Upon authorizaon of an expedite shipment, the supplier

should be prepared with the following informaon to share

with the arranging party: Protect me (the me by which theshipment must arrive); Ready me (the me by which the

shipment will be ready for pickup); Shipment terms (collect

if at the customers expense); Origin - address, contact, and

operang hours of the shipping facility; Shipment details

weight, dimensions, and stack-ability; Desnaon details

address, contact, and plant number.

CUMULATIVE SHIPMENT MANAGEMENT

The generaon, vericaon, tracking and reconciliaon

of Cums is a standard requirement for Automove Tier 1

suppliers. Cums are a way to idenfy the amount of product

that is required for suppliers to ship to their customers.

Customers expect the supplier to reconcile Cums upon the

receipt of each EDI release. Idenfying and iniang the

resoluon process of cum discrepancies is the responsibility

of the supplier.

The life cycle of a Cum naturally starts at 0 upon the

issuance of a new purchase order. The last cum received

quanty will be noted on each EDI 830 material release.

Each shipment received will be accumulated to provide the

last receipt cum received. This will include the last quanty

received, date received into the customers inventory, and

the supplier packing slip number received by the customers

manufacturing facility.

As part of the shipment process, customers expect their

suppliers to; Track and accumulate all producon part

shipments - this will become the suppliers cum shipped

quanty; Update suppliers cum shipped quanty when the

supplier is issued a discrepancy report; Idenfy past due

quanes; Idenfy the customer cum required; and Resolve

any cum discrepancies with the appropriate materials

personnel in a mely fashion.

Within a legacy environment this Cum process is typically

done in a separate system and then integrated back into the

EDI framework which is then integrated back into the order


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and inventory systems. In a network based transaconal

process the Cums are just one of the process outputs and can

be tracked and made available in real me to anyone with thecorrect permissions.

BALANCE OUT AND CLAIMS PROCESS

Obsolete material claims can be avoided by minimizing lead

mes, strictly adhering to producon schedules, and properly

managing inventory received by suppliers. Most obsolete

material claims occur at the balance out of a product. Balance

out is dened as end of model year as well as current model

engineering changes. The goal for most if not all automove

manufactures at balance out is to have zero obsolescence.

Tradionally one of the primary tasks in the balance out

process requires the materials plant representave to nofy,

in wring, the source supplying the components to be

balanced out. The customers nocaon of balance out, as

well as dened balance out ling parameters, will typically

take place outside of the established authorizaon window.

Aer receiving balance out nocaon, any supplier planning

to produce a contractual minimum run order which exceeds

raw/fab authorizaon must rst receive wrien approval

from their customers supplier scheduler or balance outcoordinator.

This process is convoluted at best. Timing, issues and

execuon related to balance out and any related claims by

suppliers for reimbursement should be visibility and under

control by all trading partners at all mes, not hidden within a

plant based system.

INTERNATIONAL SHIPPING

Given the global nature of automove manufacturing in

todays networked supply environments, internaonal

shipping will be a consideraon as part of the trading

relaonship between Subsystem and Tier 1 Suppliers

and their Tier 2 Suppliers. Understanding their supplier

responsibilies as exporters is a crical performance

component within a global supply chain. Suppliers must align

with the import procedures of their customers as the overall

supply network strives to adhere to any and all Customs

Regulaons. Each and every supplier is responsible for

complying with all customs laws and regulaons as it relates

to their acvies.

Visibility and ming once again take center stage related

to internaonal shipping. The problem isnt just the global

logiscs themselves, but the coordinaon of the assets being

moved as part of the larger inbound supply picture.

As with the inbound logiscs requirements discussed earlier,

these requirements are detailed and precise with signicant

negave ramicaons when not executed properly.

Popular INCO terms for internaonal shipments include;

FCA (free carrier), where the named place is the shipping

locaon or export port. The supplier will be responsible for:

loading material onto transport vehicle

providing all necessary paperwork such as export

licenses, and documentaon

authorizaons

Visibility and ming once again take center stage related tointernaonal shipping. The problem isnt just the global logiscs

themselves, but the coordinaon of the assets being moved as

part of the larger inbound supply picture.


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verify that the quanty and quality of the goods conform

with the documentaon

provide appropriate packaging and markings DDP (delivered duty paid), where the named place is the

manufacturers receiving locaon. The supplier will be

responsible for all items listed for FCA above, inclusive of

inland freight and any dues/fees payable for import unl it

reaches the desnaon.

In order to protect against disrupon and beer manage

variaon related to internaonal supply chains, most auto

manufacturers will ulize a regional warehouse/domesc

pick-up point to manage and retain inventory buer stock.

Therefore a supplier who is manufacturing all or a poron

of their parts overseas is expected to import to their

own domesc warehouse or distribuon center. Their

manufacturing customer will expect to pick up the freight

at the suppliers named domesc facility. In the situaon

that a supplier does not have a domesc presence, their

customer will typically act as the importer and expect that the

supplier will contract with a 3rd party warehouse provider to

manage their buer stock. Shipment clearance will usually be

performed by a customer designated broker.

Complete and accurate documentaon for all internaonal

shipments is the responsibility of the supplier. Each cross

border shipment must include specic documentaon which

typically includes the Bill of Lading, Packing List, Commercial

or Pro-Forma Invoice, and a Cercate of Origin (NAFTA

or other as requested) where applicable. Incomplete or

inaccurate documents may delay the mely delivery of

product and therefore failure to do so will most likely result in

a supplier incurring a cost for a delayed shipment.

As menoned above, a commercial or pro-forma

invoice needs to accompany each export along with

tari classicaon. Contents of the invoices and general

requirements are as follows: Port of entry to which the

merchandise is desned; Complete name and address of

consignee, along with the plant ID #; Name and address of

shipper, including tax ID#; Name and address of the customs

broker; Ship date; Detailed descripon of the merchandise,

including the manufacturers part number so that the

manufacturer can apply proper HS Classicaon and NAFTAeligibility; Quanes, weights and unit of measures of the

merchandise shipped; The purchase price in the currency

of purchase; Value of each item in the currency in which

the transacons are usually made; Type of currency; All

charges upon the merchandise itemized by name/category

and amount; All rebates, drawbacks, bounes, separately

itemized, allowed upon the exportaon of the merchandise;

Country of origin; Dies, molds, tools, engineering work and

cost associated; Tari classicaon number; INCO terms;

Invoice #; and Declaraon of truth.

Invoices and aachments must be made available in the

language appropriate for the country of importaon. If any

required content is excluded from the invoice, the customs

clearance of the shipment will be delayed. Typical omissions

occur in the areas of values, descripons, and country of

origin.


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CONCLUSION

Overall One Network Enterprises provide a subscripon based

soware plaorm service in the cloud. The architecture

supports a deep automove representaon which can model

every automove supply requirement discussed in this paper

including forecasng, demand management, inventory

planning, policy based replenishment, order aggregaon,

shipments, electronic commerce, inbound logiscs, cum

management, balance out, and internaonal freight.

In addion, the capabilies described in our tunable system

of control, which is comprised of a subscripon based

network of trading partners, represented both as mul-

party as well as mul-echelon, gives our customers the best

chance of meeng and exceeding all AIAG/MMOG supplier

requirements.

For suppliers looking to more protability parcipate in

todays demanding automove supply chains, or for those

looking to expand their business through protable growth,

they must look outside the tradional soluon set. The One

network soluon, while being advanced as compared to

legacy, is well proven having been in producon for over 10

years and supporng some of the worlds largest internaonal

supplier networks including one of largest automove

OEMs, one of the largest automove Tier 1 suppliers, one

of the largest Aerospace companies, and one of the largest

electronics manufactures, along with a strong percentageof all consumer goods moved across the US and certain

internaonal countries.

COMPLETE AUTOMOTIVE INBOUND SUPPLY SOLUTION


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18 O N t k E t i All i ht d


Corporate Headquarters US

One Network Enterprises

4055 Valley View Ln, Suite 1000

Dallas, TX 75244

Tel: +1-866-302-1936 (toll free)

+1 972-385-8630Email: [email protected]

Web: www.onenetwork.com

Internaonal Headquarters

One Network Enterprises (Europe)

PO Box 59383

London NW8 1HH, UK

Tel: +44 (0) 203-28-66-901

Email: [email protected]: www.onenetwork.com

For more informaon contact One Network at:

Tel: +1-866-302-1936 (toll free)

Email: [email protected]

Documents

One Network Enterprises Auto Oem Wp 2014 (1)