Automotive Trucks information on net.

Pamela Lopker bought a Ford Expedition recently. The dealership said she would get it in six weeks. It took seven. Lopker has a problem with that. "It only takes 72 hours to build a car," she points out. So, where's the delay? It's in the supply chain.

Lopker is the founder, chairman, and president of QAD Inc. (Carpinteria, CA), an enterprise resource planning (ERP) supplier. Needless to say, she's been studying these sorts of supply chain issues for a while. Here are some of her thoughts on why there are problems in communicating from one company to another, and what she thinks needs to be done to help accelerate order to delivery of cars and trucks.

AD & P: Why does it take six weeks to get automotive parts to automakers?

Lopker: Automotive production starts when you order a car from the car dealer. The dealership periodically places those orders to the automaker. The automaker plays around with these actual orders to create "wish-to-be" orders, which the automakers call their "marketing forecast." Then they decide what they're going to tell the next layer down, the Tier 1 suppliers, to make in terms of seats, carpets, big-buy parts, and so on.

Each link typically adds a week for receiving and processing orders, developing requirements, and placing orders to the next supplier down. The delays in information flow are all from internal processes, usually because suppliers tend to batch things up. That's how you get to a minimum of six weeks to make your part. We need to adjust the batches to lots of one. We need to have information flowing continuously through the supply chain so we can be reactive to actual customer demand.

AD & P: I though EDI was supposed to speed the flow of communications?

Lopker: Electronic Data Interchange (EDI) is a point-to-point distributed model. It's more of a rigid technology. EDI works well from the OEMs to the Tier 1 suppliers, but that's because there are only a dozen OEMs and only a hundred Tier 1 suppliers. When you go from the hundred Tier 1s to the thousands of Tier 2s, the cost of having tight EDI links for every partner combination becomes prohibitive. EDI works very well for very tight relationships, where you have few partners doing 80% of the business. The new XML standards are much more flexible, but still fairly expensive to set up between two partners. XML is good for faster, lightweight connections, between trusted trading partners.

AD & P: Is data transmission the only problem?

Lopker: The real issue is in processing production information into orders. The state-of-the-art today is to run material requirements planning (MRP) nightly or weekly, planning production orders, and then using that production plan. We need to go to more of a rate-based manufacturing model rather than a work order-based manufacturing model. We need to be able to reschedule manufacturing on the fly, resequence production according to actual demand coming through the supply chain. If I have three blues and five reds coming down a production line and a couple of the blues are not in demand yet, but my next order is for a purple, I need to be able to put in that purple and move the blues back.

AD & P: But wasn't that the purpose of ERP?

Lopker: Yes. But did ERP fulfill that vision? No. ERP's initial focus was on internal operations, not the connectivity of demand between enterprises. That is the next evolution in manufacturing management. We currently spend a lot of time developing processes for accounting, manufacturing, and distribution--once you get the order into the enterprise. But what value is there to saying you need 1,000 items when you already have 999 of those already sitting on the shelf somewhere in the pipeline? We need to change that to a system based on the continuous pull of what is actually required by the car dealerships. It is the pull signal that goes through the series of tier suppliers that support the dealership.

AD & P: Isn't there supply chain management (SCM) software supporting those sorts of inter-enterprise communications you're talking about?

Lopker: Up to now, the supply chain model promoted by enterprise and supply chain software vendors has been what I call "Communist command-and-control." Each of the vendor's software basically has to be the center of the universe and everybody has to hook up to it. Supply chain partners aren't buying into that model.

Information management in the supply chain has to follow a distributed model that lets everybody maintain their own systems and their own connections to their customers and suppliers. Yet, the model must also pass information through the supply chain. Future distributed information chains won't be just EDI; they will be a mix of things: EDI, Internet, XML, some sort of comma delimited files, and periodic batch file transmissions.

# posted by Medical Information : 12:55 AM