The Future of Automotive Supply Chain: An Interview with Jeff Trimmer
What are the greatest opportunities for improving the automotive supply chain?
The question itself contains the answer. The answer lies in the supply chain. Over the last 10 to 20 years, OEMS, and more recently the Tier One suppliers, have "leaned" themselves out, and actually are working quite well together. The opportunity now lies in the Tier Two and below suppliers. There are enormous opportunities to eliminate waste, improve quality, and reduce cycle time if we can connect and manage multiple tiers of the supply chain. There are really two problems here. The first is identifying and connecting the chain. The Internet provides this opportunity. Before the Internet we could talk about managing the supply chain, but we had no way of hooking the multiple tiers together. The second problem is the type of suppliers in the lower tiers. Typically, these are smaller suppliers with limited resources. Helping smaller suppliers upgrade their capabilities and participate constructively in the supply chain will be a major challenge.What are latest and greatest tools used at DaimlerChrysler for its supply chains?
Well, we can’t give away all our secrets, but we´re excited about a couple of projects we´re working on. One is called EasyMap. It´s a supply chain mapping tool that both our internal people and suppliers can use to lay out the various levels of the supply chain. We´ve already had some exciting examples of suppliers using this tool to identify opportunities to eliminate waste from the supply chain. Some other projects include our new Balanced Scorecard for suppliers that allows us to tailor rating criteria for different commodities, a new systems cost model we´re developing called Total Cost of Ownership. The field is moving ahead quickly.Which innovations in the supply chain have long-term value?
I think the Internet and the techniques of business-to-business e-commerce are very exciting right now. The problem, I think, is that many analysts and not a few companies are focusing on the wrong things. There is too much focus on using the Internet for auctions and catalogue buying. Clearly, there is some value in reducing transaction and purchase costs using Internet purchasing for auctions and catalogue buying, but if that´s all you´re focusing on, I believe you´re missing the major opportunity of the Internet. It is very difficult to have a long-term strategic relationship with a supplier if all you´re doing is buying his products at auction. The real opportunity in the Internet, I believe, is to manage those long-term strategic supplier relationships more effectively. For the first time, we have a tool in the Internet that potentially allows us to manage the complexity of our supply chains through multiple tiers. Companies that use this tool to eliminate waste, reduce cycle time, and improve quality throughout their supply chains will not only satisfy their customers better and earn greater profits for themselves, but will also see their supply chains earn greater profits as well.How does DaimlerChrysler plan to meet the challenge of AutoXChange?
This touches on some ongoing projects at DCX, but let me just say that the Ford/Oracle JV is an interesting concept, and at its heart is the concept of using the Internet to manage the supply chain. I´m not just sure how quickly they´ll be able to realize the benefits of this venture beyond some initial purchases of MRO items, etc. As far as DCX´ plans, we have been active in the use of the Internet with our suppliers for a number of years. In fact, if you really looked at operational applications that use the Internet, I believe DaimlerChrysler is the leader in installed applications. We already are 100% electronically connected with our production suppliers; all our production schedules, supplier releases, purchase orders, and supplier payments are handled online. The challenge for us is to take this leadership to the next level. We are actively working on a number of projects which will be announced at the appropriate time.Can you discuss supply chain practices of German automotive manufacturers and their integration at DaimlerChrysler?
I really can comment only on the former DaimlerBenz programs. DaimlerBenz had a very active and well-supported supplier relations program called Tandem. It was a strong program for communication, joint work on costs and waste elimination, and technology identification and management. It was limited in that it concentrated solely on first-tier supplier relationships. As you are aware, the Chrysler program was called the Extended Enterprise, which is now a trademarked name for DCX. Over the last year and a half, we have worked together with our German colleagues to pull together a new integrated supplier program which we call the new Extended Enterprise. This program was introduced to our suppliers in our First Global Supplier Plenum in Frankfurt last September. The key to the new Extended Enterprise was to tap the best aspects of both prior programs – the technology management and communication aspects of Tandem, and the multiple-tier management and benefit-sharing aspects of Extended Enterprise. To these best practices we´ve added two new concepts. First, we now offer suppliers the opportunity to take advantage of multiple market and brand opportunities. We can now offer our suppliers the chance to become true global suppliers by supplying both Chrysler and Daimler operations. Second, we believe the opportunities to use advanced electronic communication and management techniques will be key. The new Extended Enterprise was conceived to use the best of both prior companies and to add new flavors to our global supplier relations efforts. We´re working now to flesh these general concepts out into specific global programs including global commodity strategies, a new global Total Cost of Ownership cost management program, a global e-extended enterprise electronic strategy, and so on.Jeffrey Trimmer is Director of Operations & Strategy, Procurement & Supply for DaimlerChrysler Corporation. Prior to the merger, he held the same position for Chrysler Corporation. He is responsible for continuous improvement activities, administrative support, intranet activities, strategic studies, and systems developments in Daimler Chrysler´s Procurement & Supply organization. He also acts as the Automotive Industry Action Group (AIAG) liaison for the company.
