M2M

WHAT IS MMOG/LE?

Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE) is a comprehensive self-assessment required by many OEMs and Tier 1 suppliers. Nearly the entire automotive industry uses MMOG/LE in the supply chain to evaluate production and parts, service and warehousing processes. The assessment also establishes a common definition of supply chain management processes to help organizations:

• Determine the robustness of existing internal processes
• Benchmark supply chain operations
• Facilitate continuous improvement
• Increase customer satisfaction
• Streamline the flow of information and products throughout all tiers of the supply chain

The Automotive Industry Action Group (AIAG), the North American automotive standards association, and its European counterpart, Odette, introduced MMOG/LE in 2002 to improve global supply chain management. Global OEMs such as Ford, GM, Chrysler, Volvo Car, Volvo Truck, Jaguar/Land Rover, Renault and PSA require MMOG/LE globally.

In recent years, Tier 1 automotive suppliers have also embraced MMOG/LE, requiring their suppliers to complete the assessment. These organizations typically require an annual update of the assessment to ensure that suppliers continue to maintain established best practices.

MMOG/LE IS SIMPLY GOOD BUSINESS!

Automotive suppliers around the world have used the MMOG/LE assessment to improve materials management operations and logistics. Companies typically report inventory reductions as high as 50 percent and most report equally significantly improvements in the organization’s delivery performance. MMOG/LE will highlight areas where enterprise technology helps automate processes to eliminate error-prone manual processes. Other critical business process improvements reported by companies who used MMOG/LE:

• Reduced inventory carrying costs up to 50%
• Reduced premium freight costs by 85%
• Reduced obsolescence costs by 80%
• Improved delivery rating or service rates up to 15%
• Reduced employee training by 50%
• Acquired new business

History has shown that companies achieve the best results from using MMOG/LE when executive management actively participates and continuous improvement is a discipline rooted in the organization’s culture.

MMOG/LE KEY AREAS OF FOCUS

MMOG/LE focuses on critical supply chain management issues, including customer requirements, capacity constraints, contingency planning, supplier capability, resource allocation and employee skills. MMOG/LE helps organizations to address all of these issues, but also covers areas of your business, where automation and systems can significantly increase plant efficiency. The MMOG/LE supply chain process model provides a visual overview of the chapters and business processes covered within MMOG/LE.  

MMOG/LE CHAPTERS

CHAPTER 1 - STRATEGY AND IMPROVEMENT

1.1 Vision & Strategy - [e.g.: Become top 10% logistics partner. Attract new customers, at least one each year in next 5 years.  Grow 20% per year in next 3 years.]
1.2 Objectives - [e.g.: Lower safety inventory from 4 to 2 days. Shorten  planning and production scheduling time from 2 days to 2 hours. Quit night shift. Improve quality. Achieve 100% accurate product labeling and ASNs.]
1.3 Measurement, Analysis, and Action Plans - [e.g.: Eliminate manual input and non-standard logistics procedures.Measure inventory cost and aging routinely. Measure customer satisfaction.]
1.4 Continual Improvement - [e.g.: Improve processes continuously; set clear goals; make improvements achievable within short time frames and limited budgets. Use Pareto principle!]
1.5 Supply Chain Development - [e.g.: Implement adequate IT solutions: ERP, EDI, labeling. Eliminate not-integrated systems. Make a rule that product-development and logistics teams must cooperate to meet packaging, shipping, and other logistics requirements.]

CHAPTER 2 - WORK ORGANIZATION

2.1 Organizational Processes - [e.g.: Organize training. Track peoples' skills.]
2.2 Operating Procedures and Work Instructions - [e.g.: Visualize responsibilities and procedures. Test and amend working procedures.]
2.3 Resource Planning - [e.g.: Measure and plan equipment, IT resources.]
2.4 Work Environment & Human Resources - [e.g.: Measure and plan staffing, skills, and work environment.]
2.5 Risk Assessment and Management - [e.g.: Asses risks to supply chain: lack of knowledge transfer, nature disasters, roads, railways, trivial risks, ...]

CHAPTER 3 - CAPACITY & PRODUCTION PLANNING

3.1 Product Realization - [e.g.: Ensure that Sales, Enginering, and Logistics cooperate in product realization: Will the materials be supplied on time. Is tracing, labeling, and packaging enabled.]
3.2 Capacity Planning - [e.g.: Key customers' planning parameters must be integrated in the automated planning system which produces realistic and achievable results.]
3.3 Production Planning - [e.g.: Production schedulling methods must enable the realization of customers' orders through use of  'Pull' or 'Push' production planning methods.]
3.4 Systems Integration - [e.g.: Receipt or sending of electronic messages to/from partners must be integrated with core ERP system - not realized using manual operations to eliminate errors.]

CHAPTER 4 - CUSTOMER INTERFACE

4.1 Communication - [e.g.: Enable automatic integration of electronic messages in ERP system, thus eliminate, re-keying, information delays, and minimize non value added tasks.]
4.2 Packaging & Labeling - [e.g.: Enable tracking quantities and locations of containers to ensure that products and materials are on right place at right time for customer and production.]
4.3 Shipping - [e.g.: Enable shipping and transportation process to deliver goods on time, undamaged, at minimum cost, and properly marked.]
4.4 Transportation - [e.g.: Measure and track transportation effectiveness and quality by measuring shipping performance, using quality assurance procedures, and packaging instructions.]
4.5 Customer Satisfaction & Feedback - [e.g.: Measure customer satisfaction to identify opportunities for business improvement. High customer satisfaction will put you on top of suppliers list.]

CHAPTER 5 - PRODUCTION & PRODUCT CONTROL

5.1 Material Identification - [e.g.: Enable proper and error-prone identification and placement of materials to prevent delays and production disruptions.]
5.2 Inventory - [e.g.: Implement integrated logistics and accounting inventory system to minimize leading times, transportation waste, and to ensure appropriate business decision are made.]
5.3 Engineering Change Control - [e.g.: Ensure management and of engeniring change control to ensure proper part are produced and delivered, and to minimize obsolete materials inventory.]
5.4 Traceability - [e.g.: Implement tracing in all phases: procurement, production, and shipping to customer to quickly find the root causes of  defects.]

CHAPTER 6 - SUPPLIER INTERFACE

6.1 Supplier Selection - [e.g.: Enable measuring the suppliers' performance to develop an efficient supply chain.]
6.2 Supply Chain Management Agreement - [e.g.: Maintain properly documented supply agreements in order to clarify roles and responsibilities, expectations, and commitments.]
6.3 Communication - [e.g.: Enable automatic integration of electronic messages in ERP system, thus eliminate, re-keying, information delays, and minimize non value added tasks.]
6.4 Packaging & Labeling - [e.g.: Enable tracking quantities and locations of containers received from suppliers to ensure that products and materials are on right place at right time for production.]
6.5 Transportation - [e.g.: Measure and track transportation effectiveness and quality by using shipping performance indicators, quality assurance procedures, and packaging instructions.]
6.6 Material Receipt - [e.g.: Streamline the process of receiving materials to facilitate effective input flow, including on-time quality control. Enable quick discovery and communication of any discrepancies found to minimize risk of late deliveries to customer.]
6.7 Supplier Assessment - [e.g.: Asses and monitor supplier capability and performance to identify opportunities for improvement and eliminate delivery risks.]

WHO IS INVOLVED IN COMPLETING THE MMOG/LE ASSESSMENT?

When a customer requires an assessment, the organization’s executive management must participate in the sessions. A single individual within the organization should coordinate and supervise the assessment. QAD recommends that the site’s Supply Chain Manager act as the coordinator. In a multi-site organization, the company should appoint an MMOG/LE Champion to ensure a consistent approach and promote sharing of lessons learned across all facilities. In addition to top management and the supply chain manager, QAD recommends that at least the following people or roles participate:

• Purchasing/procurement manager
• Production manager
• Engineering manager
• Distribution manager
• Human resourcesQuality manager
• IT/IS staff
• Key operational personnel at all facilities

QAD ERP SUPPORTS YOUR MMOG/LE REQUIREMENTS

We built QAD Enterprise Applications for the automotive industry to support MMOG/LE compliance requirements through simple configuration. With embedded functionality such as EDI and Web-based supplier communications, supply chain management, bar coding, release management, business process management and lean manufacturing our solution not only ensures your business aligns with industry best practices, but also aligns with MMOG/LE standards. Our unique MMOG/LE tools and features including hundreds of common automotive industry KPIs, operational metrics and process maps to allow your organization to measure operational performance. These tools provide direct insight into your operational practices and business processes.

MMOG/LE Process Maps and Work Instructions

QAD created our unique MMOG/LE Automotive Process Maps to help increase individual and departmental understanding of the key assessment points of MMOG/LE. The MMOG/LE automotive process maps and work instructions offer insight into your organization’s business processes and include hundreds of pre-determined best practice processes, work instructions, compliance points and training courses.

The process maps help:

• Document supply chain processes including risk management and contingency plans, enabling employee training for new hires and back-up personnel while ensuring there is no erosion of current knowledge
  Ensure the organization-wide deployment of a consistent supply chain model or template based on industry best practice
• QAD’s unique set of MMOG/LE tools and solutions help suppliers ensure that required business systems are in place for customer MMOG/LE reviews. QAD’s long-tenure of industry participation, expertise in enterprise resource planning, and history of helping suppliers successfully pass customer MMOG/LE audits ensure that our products and services produce results for our customers.