1. Materials Management Operations Guideline/Logistics Evaluation
MMOG/LE
Materials Management Operations Guideline/Logistics Evaluation
November 2007

2. Agenda Why MMOG/LE? What is MMOG/LE? Completing the Self-Assessment
Who is Requiring MMOG/LE?
MMOG/LE Key Criteria
AIAG/Odette MMOG/LE Benefits Survey
Customer Success Stories
Supporting Training and Documents Available

3. Why MMOG/LE?

4. Improving Supply Chain Delivery Performance
Gain control of processes
Reduce inventory carrying costs, premium freight, rework, line stoppages, lead times
Gain control of supply chain
Increase inventory visibility
Reduce supply chain risk
Support continuous improvement
Increase customer satisfaction
Increase competitiveness
Actionline Magazine, Fall 2006

5. Who is implementing MMOG/LE?
Suppliers to comply with OEM requirements
Suppliers in emerging markets
Companies looking to
Reduce supply chain risks
Improve supply chain compliance and
Increase delivery and long distance performance
Regional industry associations
Brazil, Romania, China, etc.
AIAG - Automotive Industry Action Group

6. MMOG/LE Outside the Automotive Industry
Universities
High Schools
Other non-automotive industries
Hospitals
Construction
Aerospace
Chemistry
Electronics
Industrial
Retail

7. What is MMOG/LE?

8. Principles of Global MMOG/LE
Recommended standard for materials and logistics
Self-assessment tool for identifying gaps in processes
Based on agreed business processes
By OEMs and suppliers
Ford, Chrysler, PSA, Renault, Volvo Car, Volvo Truck, etc.
Based on extensive, best practices
6 chapters
206 criteria
Determine current level of plant performance

9. Scoring Summary (ABC Classification)
A Level
Supplier is considered to be at or near “world class” standards (90% or higher).
B Level
Supplier is deficient in two or more aspects of a given category or multiple categories (75% < 90%). An action plan should be put in place and the corrective action should not require a significant amount of time to implement.
C Level
Supplier is deficient in one or more critical or high impact aspects (75% or less). Action plans required to ensure deficiencies do not result in serious or prolonged issues to the customer.

10. MMOG/LE Self Evaluation Categories
Strategy and Improvement
Work Organization
Production and Capacity Planning
Customer Interface
Production and Product Control
Supplier Interface

11. MMOG/LE Translations Available in 10 languages including:
English French German
Spanish Portuguese Chinese
Romanian Czech Russian
Over 2000 trained users in 16 different countries

12. What Does this Mean to Me?
Attend AIAG/Odette MMOG/LE standard training
Understanding and building a team to complete assessment
Complete self-assessment
Attend self-assessment education and review
Develop gap analysis and action plan customer, internal, and sub suppliers
Implement Action Plan
Internal processes and systems
Sub suppliers (e.g, Tier 2)
Customer certifies self-assessment score

13. Completing the Self-Assessment

14. Download the Self Assessment
odette.org or aiag.org
ENGLISH
FRENCH
The following are the steps to complete the mmogle self-assessment.
First you must get a copy of it in the language that you will need. It is available for download from either AIAG’s or Odette’s web sites.
CHINESE

15. Complete the Form Each Question is Yes (“X”) or No (Blank)
1.2 Objectives
1.2.1
Objectives relative to the Materials Planning and Logistics function are defined, communicated and understood within the organization.
Why?
Objectives allow departments and employees to focus on areas of importance to achieve customer satisfaction and the organization's Materials Planning and Logistics strategy.
Criteria F2 X
All objectives are measurable and consistent with the organization's Materials Planning and Logistics strategy.
EQOS - Inventory accuracy is measured by the cycle count program, supplier delivery performance, customer delivery performance. x
Objectives are accepted by all relevant functions and are clearly cascaded throughout the organization.
EQOS reviewed by operations and at staff meetings and posted monthly for all employees to review.
Objectives are reviewed with senior management at planned intervals.
Populates the gap analysis tab 15

16. Each Question is WeightedF1
F2 Missing six results in “C” level
F3 Missing one results in “C” level

17. Submit Scoring Summary

18. Submit Gap Analysis List of All Unanswered Questions (Blank)

19. Who is requiring MMOG/LE?

20. Frequency of Submission
OEM
EMEA
North
America
South
Asia/
Pacific
Frequency of Submission
MMOG/ LE v2 Usage
Comments
Europe
Yes
TBD
Annually
Next submittal
By Jan. 2008
Annually. This is a requirement for Q1.
Currently, all regions using MMOG/LE for Q1 require Level A except Europe and Asia Pacific, which currently accepts Level B.
Western Europe and Central and Eastern Europe only
New vehicle project
Strong involvement of the plant management is required in order to make sure that progress is in place.
Required all suppliers
Volvo Car
Annually. This is a requirement for Q1
Volvo Group
Europe, a few suppliers in the Middle East
Yes, Brazil
India, China
Annually self-audit submission and follow-up to be implemented
Next Submittal 20

21. OEM Supplier Audit Policy
Supplier evaluations are completed by Chrysler personnel using the Supply Process Analysis (SPA) for new suppliers, new supplier locations, and problem suppliers. The SPA encompasses elements inclusive of the MMOG self-assessment. Additional audits will be conducted on suppliers that have a significant variance in the self-assessment ranking and their actual Chrysler Supply performance rating.
North America and Europe only. Potential suppliers, new suppliers, and problem suppliers. All suppliers will eventually get an audit. Major and problem suppliers will be prioritized.
Suppliers are consulted on the Global MMOG/LE in the Project Phase. Annual audits are not required annually, only during the project phase. In the Trial phase, evaluations are carried out if there are problems with the supplier.
New and problem suppliers
Volvo Car
An attempt is made to visit all new suppliers and big volume suppliers. For potential suppliers self-assessment is the first step.
Volvo Group
Potential suppliers, new suppliers, and problem suppliers 21

22. OEM Focus During MMOG/LE Audits
Strategy and Improvement
Management commitment
Capacity and Production Planning
Supplier Interface (Tier 2)
Performance measurement
Sub-tier supplier communication
Sub-tier suppliers in emerging markets
Improvement Plan
Self-Assessment Quality

23. Key MMOG/LE Criteria

24. MMOG/LE Processes 24

26. Key Criteria Materials Management Objectives
Analyzed, measured (action plans if necessary)
Defined, documented, communicated and understood
Identify continuous improvement opportunities
Corrective action for bottleneck processes
Job descriptions, work instructions and training plans
AIAG - Automotive Industry Action Group

27. Key Criteria Key Performance Metrics Delivery Performance
Supplier Performance
Internal performance (plan versus actual)

28. KPI’s for MMOG/LE* KPI4GMML 6 KPI4GMML 4 or Supplier Plant
Production Disruption
Schedule Modifications
Incomplete units
Line Stops
KPI4GMML 6
Supplier Communication & Cooperation
Criteria : Self-sufficiency, Reliability, Responsiveness Supplier problem notification, Availability, Flexibility
KPI4GMML 4
Material Handling & Identification or
Delivery Requirements
ASN Message
Supplier
Plant
Customer Plant
Warehouse
Assembly Line
DOCK
KPI4GMML 3
“VMI”
KPI4GMML 2
Delivery Accuracy or
KPI4GMML 1
ASN Performance
*Key Performance Indicators for Global Materials Management and Logistics

29. Key Criteria Resource Planning Capacity Planning
Flexibility and availability are optimized
Contingency plans and emergency procedures exist
Employees are trained
Capacity Planning
Long, medium, short-term plans reviewed regularly
Process in place to notify of shortages
Support all requirements for all customers
Minimize inventory
Obsolescence
Raw material
WIP
Finished goods
AIAG - Automotive Industry Action Group

30. Key Criteria Communication Material Identification
Scheduling automatically integrated into system without manual intervention
830/DELFOR/Planning Releases
862/DELJIT/Shipping Releases
System compares resources versus requirements
Process in place to notify of resource limitations
Material Identification
Segregate good/bad material
Packaging and bar code labeling
Product Realization
- PCC
AIAG - Automotive Industry Action Group

31. Key Criteria Production and Product Control
Process to monitor inventory levels
Safety stock, minimum stock, etc.
Count Accuracy
Product structure accuracy
Control and handling of WIP, scrap, rejects, returns
Traceability
Product Realization
- PCC
AIAG - Automotive Industry Action Group

32. Key Criteria Engineering Change Control Shipping
Participate and formal sign off
New parts/past models/inactive parts
Shipping
Timing, contents and accuracy of shipping labels
Labels match customer requirements
Data content of ASN is 100% accurate
Controls in place to prevent shipping discrepancies
Customs clearing process (if applicable)
Packaging and Labeling
PCC
Bar code scanning and ASN (error proof system
- We can keep track of container inventory. MFG/PRO can include container on the BOM.
AIAG - Automotive Industry Action Group

33. Key Criteria Supplier Communication
Process to ensure sub-tier suppliers can support production on-time with the right quantities
Electronic communication (EDI or Internet)
Releases, schedules and ASNs
Planning horizon is appropriate
In-transit visibility from ASNs
Customs clearing process (if applicable)
Process for suppliers to notify of shortages
Packaging and Labeling
PCC
Bar code scanning and ASN (error proof system
- We can keep track of container inventory. MFG/PRO can include container on the BOM.
AIAG - Automotive Industry Action Group

34. Key Criteria Supplier Packaging Bar code labels
Process in place to define packaging and pack size
Ensure sufficient packaging material is available
Material Receipt
- We can specify dock location
AIAG - Automotive Industry Action Group

35. Key Criteria Supplier Assessment
Methodology to select and evaluate suppliers
Continuous improvement process for sub-suppliers
Supplier performance metrics
Key Criteria
Material Receipt
- We can specify dock location
AIAG - Automotive Industry Action Group

36. AIAG/Odette Benefits Survey36

37. AIAG and Odette MMOG/LE Survey
Survey administered in March/April 2007
Over 160+ survey respondents
North America
Europe
China
Respondent demographics
Tier 1, Tier 2, Tier 3 and Aftermarket
Large, Midsize and Small Companies
Implementation time was from 1 to 3+ years
Management commitment was not measured
LKPI Training Course - Blank Session - 11/15/2005 37

38. Top Five Performance Improvements: Tier 1 and Tier 2-3
Regardless of Tier:
Ability to meet ISO TS-16949
Ability to keep existing business
Data accuracy
Ability to support lean (Tier 1)
Overall supplier rating (Tier 2-3)
Inventory Control
LKPI Training Course - Blank Session - 11/15/2005 38

39. Top Five Performance Improvements: Large, Midsize and Small Companies
Regardless of Size:
Data accuracy
Ability to meet ISO TS-16949
Ability to keep existing business
Large suppliers also indicated
Delivery accuracy and inventory control
Midsize suppliers also indicated
Supports lean implementation and new business
Small suppliers also indicated
Overall supplier rating and new business
LKPI Training Course - Blank Session - 11/15/2005 39

40. Top Five Performance Improvements: by Time Implemented
Regardless of Time Implemented:
Data accuracy
Ability to meet ISO TS-16949
Ability to keep existing business
Also indicated:
< 1year: Ability to support lean and inventory control
1-2 years: Inventory control
2-3 years: Delivery accuracy and line shortages
3+ years: Reduced manual entry and inventory control
LKPI Training Course - Blank Session - 11/15/2005 40

41. Data Accuracy Positive Performance Improvement Mean Score Over Time58 60 62 64 66 68 70
<1 Year
1-2 Years
2-3 Years
3+ Years
Notes:
On a 100 point scale
Over 60 is considered a strong positive response

42. General Findings
Meeting customer requirements and data accuracy are consistent benefits regardless of time, size or tier
MMOG/LE usage continues to improve year after year
MMOG/LE is an investment in first year of implementation
Continuous improvement is a journey, not a destination
Minimal differences between N.A. and Europe
Performance improvements were consistent
LKPI Training Course - Blank Session - 11/15/2005 42

43. MMOG/LE Results Identified by OEMS

44. Global MMOG/LE Benefits
Renault requires the use of Global MMOG/LE in project phase (vehicles or engines)
In July 2007 for the “Twingo” program:
For 28 suppliers using Global MMOG/LE
Service Rate = 91 %
For the others :
Service Rate = 80 % 44

45. Delivery Rating Improvements
1641 suppliers in N.A. completed MMOG/LE 2006/2007
As of October 2007, 93% are >80
15% improvement in past 10 years
85% of suppliers are at MMOG/LE Level “A” 45

46. Benefits of Using MMOG/LE China Tier 1 Supplier’s Opinions
Reduction in raw material, work-in-process and finished inventory
More efficient process from receiving raw material to shipping inventory
Visible signs on shop floor identifying manufacturing operations
Use of metrics to capture failure in process
Importance of appropriate packaging
More organized warehouse: FIFO process used more effectively
More control and accountability in the material ordering process
More warehouse space
Ease of production planning and scheduling process
Less errors
Ability to compare material received versus material shipped
Ability to see ASN’s from tier 1’s and pay tier 1’s electronically
Improved communications within the supply chain

47. Delivery Score Improvements
602 suppliers completed MMOG/LE
54% improved in Chrysler delivery rating
Average improvement to Chrysler rating = 30%
36% improved MMOG/LE score
85% are at “A” level

48. MMOG/LE, Volvo Group, update Sept ‘07
All new suppliers are requested to submit the document
A Requirement for existing major and poor performing suppliers
A Criteria of Volvo Group Key Elements Procedures, Logistics
> 850 assessments received, > 230 verified with Volvo internal personnel (most often on location)
Linked to supplier relationship development process
Example N-America: Self-assessed 44% of suppliers on A-level
After verification 37% of suppliers on A-level
Example S-America: Adherence to supply instructions (Mar to Aug)
Total local suppliers average % correct day/quantity
Total self-assessed suppliers %
All verified level A-suppliers 96.7%
All verified level C-suppliers %
not included: Volvo Car Corporation 48

49. MMOG/LE Benefits and Success Stories from Suppliers

50. JCC Company Background
Company size $50 million USD
Supplier in Fuzhou, China
Parts produced
Aluminum alloy pistons
Motor air compressors
Diesel engines
Outboard engines
OEM and aftermarket supplier

51. Results Reduced raw material and finished goods inventory by 50%
Ability to achieve 100 points for monthly delivery rating
Decreased premium freight
Improved overall rating by 20%
Obtained a competitive advantage
Obtained new customers
Enterprise visibility into customer requirements drives business
Gained efficiencies in productivity, quality and delivery

52. Products include pulleys, dampers and idlers
London, Ontario Operations Background
Products include pulleys, dampers and idlers
Approximately $55 million in sales
Supplies to OEMs and major Tier 1s
Major customers include:
Ford
General Motors
Nissan
Automotive Component Holdings (Visteon)

53. Physical Inventory Inventory Value Delivery Performance
London, Ontario Operations Results
Physical Inventory
Reduced frequency from monthly to annually
Inventory Value
Reduced 50% in past years
Delivery Performance
On time shipping performance to customers in 2006 was 99.7%
Delivery ratings to customers providing feedback was 100
Supplier Performance
On time delivery from suppliers is 100% on date required
97% of material requirements are communicated electronically to suppliers
95% of incoming material shipments are transmitted via ASNs

54. Global MMOG/LE Projects
North America
TRW – Freudenberg – Akebono – Plastech – Gates - Schefnacker – Georg Fischer – General Bearing – Wagon Automotive – Lear – Schefenacker
Europe
ArvinMeritor - Tower Automotive - SNOP - recia - Mecaplast - MGI Coutier - Magneti Marelli - Treves – Robert Bosch - Rieter Automotive - Hutchinson – SIEMENS VDO Automotive – Behr France – Metaldyne International France – TRW France - Edscha France – Beru Eyquem SAS – Amis (Sifcor) – APM – Autoliv France – Continental – Cooper Standard – Dunlop roues – Electrofil – Fabri – Freudenberg – GKN Driveline – Gris Découpage - Mahle – Mann Hummel – Alps – Fuji Koyo …
China
Changhua – Chaoli – Jiaxuan – JCC – Xiyuan – Zhongyi – Zongshen
South America
Mueller 54

55. Supporting Training and Documents Available

56. Harmonized Global Training
1-Day standardized global AIAG/Odette training
Training Slides & Instructor Manual
Participant Manual
Implementation Toolkit
Odette/AIAG
MMOG/LE
Work Group

57. MMOG/LE Course Objectives
Continuous Improvement Tool
What is the MMOG/LE?
Assessment
Gap Analysis
Implementation
MMOG/LE
Use Global MMOG/LE information in this course as a tool for continuous improvement and as a result be able to:
Describe all sections of MMOG/LE
Self-assess your operations and perform a gap analysis
Generate, based on gap analysis and sample project plan, your own Global MMOG/LE improvement implementation plan 57

58. MMOG/LE Training and Seminars World Wide
America’s
Europe
Others
55 people
15 people
177 people
United Kingdom
Czech Republic
China
United States of America
700 people
180 people
6 people
4 people *
Sweden
Slovac Republic
Iran
Canada
50 people
130 people
15 people
Germany
Romania
Turkey
200 people
India (training Fall 2007)
Additional Seminars held:
Japan
Taiwan
Hong Kong
Thailand
Mexico
480 people
25 people
France
Poland
100 people
160 people
13 people
Brazil
Spain
Russian Federation 58 58
AIAG - Automotive Industry Action Group
AIAG - Automotive Industry Action Group 58 58 58

59. Related Guidelines and Best Practices
Available at or
M-7: Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE)
M-8: Key Performance Indicators for Global Materials Management and Logistics (KPI4GMML)
Trading Partner Agreement for Global Materials Management and Logistics (available March 2008)
E-17: Joint Automotive Industry Forum China B2B Recommendation
EDI/XML Project Planner
Global Evaluation for Carriers and Logistics Service Providers 59

60. MMOG/LE Seminars held Globally
Americas
US – Mexico – Brazil
Asia
Japan – Taiwan – China - Hong Kong – Thailand – India
Central and Eastern Europe
Poland - Czech Republic – Slovakia – Turkey – Russia – Romania
Europe
France – UK - Spain 60