E Ford Merkle Jun 8

8/8/2019 E Ford Merkle Jun 8

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Supply Chain MonitoringFord Parts Supply & LogisticsCase Study

Roger Merkle

Former Manager, North American Inventory Planning Department



Ford Parts Supply & Logistics (PS&L)Business Overview

PS&L operates a network consisting of:> 198K unique part numbers, over 1M SKUs (part/location)

> Wide mix of velocity, size, and value

> Vehicle base - 50 million vehicles on the road, 35 model years

> Logistics network - 2,000 suppliers and 5,900 authorized

dealerships> 18 HVCs, 3 HCCs, 1 LV/LC, 1 PRC, and 1 NPD

> Service Parts - US, Canada, Mexico and direct global export

Complex logistics hubs, many containers, railcars, suppliers,packagers, sources/destinations, and paths

High degree of magnitude and complexity

SUPPLIERS PACKAGERSREDISTRIB.

CENTER REGIONAL

DISTRIBUTIONDEALERS



Ford PS&L « Gearing Up for Change

Acquired and centralizedrelevant data sources

New systems for forecasting, inventory planning,DRP, electronic supplier communication and

management Implemented Supplier

Performance Monitoring

Reduced inventory bytwo thirds

Record customer servicelevels

Record turn rates



PURCHASING

Low purchase price

(High Inventory)

(Stable schedules)

(Long lead times)

SOURCE (MAKE)

DISTRIBUTION

(Process-focused)

Stable Fixed Costs

Low inventory

Stable Part Mix

Stable Schedules

Low Transportation

Cost

DELIVER

Returns

CUSTOMER

FULFILLMENTVoice of the customer

(High inventories)

(High safety stock)

(High Costs)expediting, overtime

RETURN

SELL

SUPPLY

Reliable Suppliers

(High inventories)

(Long lead times)

FlexibleTransportation

PURCHASING

Low purchase price

Low Inventory

Flexible schedules

Short lead times

DISTRIBUTION

High customer

service

Stable Fixed Costs

Low inventory

Stable Part Mix

Stable Schedules

Low Transportation

Cost

CUSTOMER

FULFILLMENTVoice of the customer

High Service Levels

Managed inventories

Managed safety

stock

Managed Costsexpediting, overtime

SUPPLY

Reliable Suppliers

Low inventories

Short lead times

FlexibleTransportation

Ford - Lack of Integrated Data



Ford¶s Requirements

Culture Change

> Enable lean performance of existingsystems

> No disruption to existing operations

Prediction

> Support intelligent, proactive

analysis vs. reactive> Predict impact of current plan within

lead time for resolution

Prioritization

> Drive data to lowest actionable levelin organization

> Identify high-impact opportunities

> Combine forecasted and actualdemand levels

> Manage material velocity basedupon any desired variable of prioritization

> Manage escalation

Model-based analytics> Adapt to any supply chain, any level

of data availability> Calculate metrics across ³white

spaces´ where data availability ispoor

> Combine varying sources of data

Closed-loop issue management

> Support analysis of currentoperating business systems> Manage variability in real time w/

feedback to analysts / sourcesystems

> Manage approval process forrecommended changes

Comprehensive visibility> Identify segments and processes

with biggest problems> Locate specific material throughout

the supply chain> Assess historical performance

Support segmentation



Build vs. Buy Decision

Why not custom?

> Integrated solution (data acquisition, data model, analysis,prediction, ad-hoc OLAP capability, security, alerting,administration)

> Investment in complex algorithm development> Speed of implementation (rapid ROI)> Proven business value> Teradata Supply Chain Intelligence (SCI) provides Standard KPIs,

Reports & Alerts> SCI Based on Industry Standards & Best Practices

Technology Benefits> Scalable database architecture> Operational use of analytics> Expandable and configurable data model and analytics

> Reduced Support Costs> Multiple database repository support> Developed Exception Management System

(alerting, escalation, message broadcasting)

Ford purchased Supply Chain Intelligence (SCI) from

Teradata, a division of NCR



Process the analytic results into actionable information in theformat and level appropriate for the operation

Provide analytic results for 4 distinct audiences:

> Management - personalized for responsibility Performance metrics and trends for product, processes (including alerts

themselves) and lines of business.

> Analysts Performance metrics identifying exceptions and outliers.

Predictive performance and opportunities based upon statistics.

Specific reports that address points of interest

± Recalls, missing, new product, new processes, new facilities etc.

> Operations Reactive alerts (standards) ± events that exceed standard

Proactive alerts (critical) ± product to be re-prioritized to prevent an issue

> Partners Late shipment reports, trend analyses

SCI Creates Actionable Information



Solution Example

Ford¶s Three-Pronged Solution



FORD SUPPLY CHAIN EXAMPLE: PS&L OperationSupply Chain Modeling

Utilize daily product positionand business requirementssnapshot

Re-calculate projectedquantities and time via models.Projected customer servicelevels via variability analysis

Comparison to expectedaggregated Demand by family,SKU, path

Detailed analysis of segment oraggregate performance bytime, yield, capacity,constraints, ««.

Model management at segment

levels include:o Segment lead timeo Yieldo Split/merge/path selection

Long term highly accurateforecasts not required

Track and tune standards overtime

SUPPLIERS

(Count: 2,000)

Demand

INTE2

V ALS

Segment

Allocation

SUPPLIERS CUSTOMERS

PACKAGERS

(Count: 7)

REDISTRIB.CENTER (Count: 1)

REGIONALDISTRIBUTION

(Count: 10)

DEALERS

(Count: 5,900)

REDISTRIBUTIONCENTER REGIONALDISTRIBUTION

Ship to In-YardIn-Yard toReceipt

Receipt toStock-Keep

SCI Modeling & Segmentation



Critical Alerts ± In Yard



Over Standard Alerts



Inventory Visibility



SCI ± From Two To Eight OpportunitiesTo Avoid Back Orders

Change

ShipDate

SUPPLIERS

ChangeShipDate

None

PACKAGERS

1. Receive2.Process

1.Normal/Critical

REDISTRIB.CENTER

1.Receive2.Stockkeep3.Normal/

Critical

None

REGIONALDISTRIBUTION

1.Receive2.Stockkeep

DEALERS



The actual cycle time for this

O/D pair averages over 6

days, so the assumptions

for segment cycle time are

not modeled properly.

For the shipments through this

segment, the average cycle time is

compared to the standard.

Parameter Management scores

actual cycle time vs. the current

model parameter to detect

segments with a poor fit.

Standards Management



The current model does take average

segment variability into account. Now

actual variability can be incorporated

into the model to drive accurate safety

stock

New model parameter evaluated

for fit with actual shipment

transaction cycle times

Drilling into the detailed data for each segment supports outlier

identification and users can evaluate

how well the model fits each

segment within the supply chain.



All detailed data supporting the

evaluation is available in the drill.

Histogram shows thedistribution of shipment

cycle times as apercentage of the total

shipments



F or d

: Gr ow t h

i n U s er B

a s e

F OR

D U SER C O UNT S-A CT UAL S

T HR O U GHPR O J E CT I ON S

0 5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0

N LYSTS

PL NNERS

DETROIT, L , K NS S CITY

TL NT , D LL S

MEMPHIS

S N FR NCISCO

CHIC GO

DDITION L USERS

DDITION L USERS

NEW PDC (location unknown)

DDITION L USERS

2 NEW PDCs (location unknown)

DDITION L USERS



J ul - 0 1

3

u g- 0

1 S e p- 0 1 O c t - 0 1

N ov- 0 1 D e c- 0 1

J an- 0 2

F e b - 0 2 3

pr - 0 2

J un- 0 2

O c t - 0 2 3

pr - 0 3

3

u g- 0

3 F e b - 0 4

S e p



The SCI Solution gives Ford the ability to predict and prevent potential back orders -not just react

Powerful Analysis of ³Every SKU, Every Day ́ on hundreds of millions of dollars of inventory

Daily metrics and historical trending thatallow reality-based planning to be linkedwith execution management

All members of the network now perform asa synchronized team!

Benefits:

Reduced Inventories

Improved CustomerService levels

Less overtime,expediting, andspecial handling

Higher margins

No new data sourcesrequired

Results:

10% One-Time andRecurring Reductionsin Inventory

20% Back OrderReduction

25-30% Reduced³referrals´

30% Cycle TimeReduction

Ford ± ROI

Savi ngs i n f ir st 6 months al one w as f iv e t i mes the cost of the system.



Thank You for your Attention

Email:[email protected]

E Ford Merkle Jun 8

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