Automotive Supplier Assessment: Reduce Backlogs, Improve Productivity

Difficulties with automotive suppliers are not uncommon: a supplier’s lack of adherence to delivery dates and quality can cause considerable damage to a company if it has too much of a negative impact on its own production. In a situation where backlogs are rampant, it is important to act quickly and with focus in order not to risk a production stop. IMIG successfully helps customers worldwide to solve difficulties with our automotive supplier assessment in a sustainable way, as in this project, which we will present to you below.

INITIAL SITUATION

One of our existing German customers experienced delivery problems with one of their suppliers, where upon the customer approached IMIG. We were asked to carry out a supplier assessment with the aim of identifying the reasons for the delivery backlog, initiating initial measures and making recommendations for implementation. The supplier to be audited reprocesses castings, including blasting, fettling, priming, CNC machining and inspection, especially for the mechanical engineering and automotive industries. As the company is located in Eastern Europe, IMIG was able to draw on its internationality and put together a team of experienced consultants from Eastern Europe and Germany, so that both cultures and languages were optimally represented in the project.

AUTOMOTIVE SUPPLIER ASSESSMENT: DESCRIBING THE ACTUAL SITUATION AND CAUSES OF PROBLEMS, DERIVING MEASURES

In preparation for the supplier assessment, separate meetings were held with both the customer and the supplier. Important information on the current situation and the agenda for the two assessment days were discussed, and a coordination on the provision of data and the further procedure was carried out. The supplier assessment itself was planned for 2 days and was carried out on site. The goals for the assessment were:

• Recording of the company’s situation with regard to the current inadequate delivery performance
• Assess the situation and identify current issues/causes of problems
• Classify corrective measures agreed with the supplier’s management into quick wins, medium-term measures and long-term measures
• Present impact of corrective actions on backlog reduction and ensuring increased demand
• Present an implementation recommendation for the improvement measures agreed with the supplier’s management

During the assessment, more than 40 fields of action were identified, mainly in the areas of logistics, production planning and production performance. Short-term measures were derived from these, which were aimed in particular at improving communication between the customer and the supplier as well as at improving the deficient personnel capacity. In addition, medium- and long-term measures were defined with the aim of reducing the backlog and sustainably increasing production capacity so that the contractually agreed delivery quantities can be achieved. The focus of the medium-term measures were the bottlenecks and top issues in production, warehousing, production planning and production control. All measures were recorded in an improvement plan with a time schedule.

TASK FORCE PROJECT: IMPLEMENTATION SUPPORT FOR SUSTAINABLE AND HOLISTIC IMPROVEMENT

IMIG was so convincing with its know-how and the results achieved in the two assessment days that the audited company commissioned IMIG with a task force project to implement the discussed short- and medium-term measures.

The task force project lasted 5 weeks and had the following focal points, among others:

• Implementation of regular meetings and communication both internally and with the customer to reconcile KPIs and define actions
• Introduction of shop floor management and visualisation throughout production
• Reorganisation of the raw material warehouse incl. areas for pre-picking, visualisation, parts prioritisation and reorganisation of warehouse assistant activities
• Creation of a planning and tracking tool for target/actual comparison of throughput time and OTIF
• Conducting workshops on recruiting, onboarding and reduction of fluctuation with the HR department
• Employee qualification: introduction of senior-junior principle, creation of a qualification matrix and an employee qualification plan to ensure flexible production, introduction of a “training school” for new employees
• Creation of a common understanding of goals, opportunities, data basis and terms between customer and supplier
• Creation of an inventory tool to ensure and maintain the batch sequence

Within 5 weeks, the implemented measures increased productivity by 32% in personnel-adjusted terms and a constant delivery quantity was achieved. A positive customer-supplier relationship was re-established in a very short time. The task force project also had an extremely positive effect on the entire supplier company and not just on the processes and results for one customer.

SUMMARY

An automotive supplier assessment is worthwhile both for customers and for the supplier himself: In a very short time, it becomes clear where bottlenecks can be found and what measures can be taken to eliminate them. A detailed implementation plan provides suppliers with the next steps for eliminating bottlenecks and customers with a roadmap for when the target state will be achieved.

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