Wendi Gentry-Stuenkel

Automotive Supply Chain- State of the Industry

Minimizing supply chain variability

Managing supply chain variability

Topics

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Industry Drivers- Requirements for Capital

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Industry Drivers- Requirements for Capital

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Trade off between standardization/ capital investment and supply chain cost & risk

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Logistics Relevancy

• We’re often dealing with the same

– Companies

– Locations

– People

– Capital Equipment

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U.S. SAAR – FCA US vs. IHS 2014-2020

U.S Market Proposed SAAR

Forecast 2014 - 2020

13.5

13.8

14.1

14.4

14.7

15.0

15.3

15.6

15.9

16.2

16.5

16.8

17.1

17.4

17.7

18.0

18.3

18.6

18.9

2014 2015 2016 2017 2018 2019 2020

FCA IHS

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North American Auto Assembly Plants

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Trading Partners

Trade offs between standardization/ capital investment and supply chain cost/risk

Industry Growth

Vehicle production in Mexico increased from 2.6

million vehicles in 2011 to 3.4 million vehicles in

2015

Mexican automotive and auto parts industries have

received 23.2 billion dollars in new investments since

2013

Mexico is the 7th largest producer of vehicles in the

world and projected to be the 5th largest by 2020

Mexico Logistics

Auto Parts Industry in Mexico

Source: ProMéxico Confidential Information – ©2016 FCA US LLC

Leading supplier to the USA

81.4 billion dollars in production value

58.8 billion dollars in consumption value

41.9 billion dollars in imports

64.5 billion dollars in exports

Mexico has more

than 2,500

companies engaged

in manufacturing

auto parts located

in 19 states.

Mexico Logistics

Mexico’s Trade Agreements

NAFTA:

North America

trade

EFTA: Iceland, Liechtenstein,

Norway and Switzerland

European Union

North Triangule:

Honduras, El Salvador

& Guatemala

Nicaragua

Costa Rica

G3: Colombia

Bolivia

Chile

Uruguay

Japan

Israel

Mercosur:

Argentina

Brazil

Peru

Cuba

Confidential Information – ©2016 FCA US LLC

Mexico Logistics

Security

● U.S. C-TPAT, Tier 3 - Customs - Trade Partnership Against Terrorism - Charter

member since 2002

● Canada PIP – Partners in Protection – 2003

● Mexico NEEC – Nuevo Esquema de Empresas Certificadas – January 2013

● Europe AEO – Authorized Economic Operator Security

Compliance

● U.S. – ISA – Importer Self Assessment - 2005

● Canada – PIC – Partners in Compliance – 2004

● Mexico NEEC – Nuevo Esquema de Empresas Certificadas – January 2013

● Europe AEO – Authorized Economic Operator Security

Borders- Minimizing Variability

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Border Crossing Privileges

● FAST– Free and Secure Trade – Into U.S.

● CSA–Customs Self Assessment – Into Canada

Other Initiatives

● ACE Entry Filing

● CEE- Centers of Excellence and Expertise

• COAC- Advisory Committee on Commercial Operations of Customs

● Beyond the Border

● NAM- Customs Task Force

Borders- Minimizing Variability

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Carrier Assessment

● Modeled after MMOG (Materials Management Operating Guidelines)

● 14 onsite assessments have taken place between Sept 2014 – May 2015. 14

additional onsite assessments are planned for the remainder of the 2015 CY.

● Second FCA assessment team added in Feb 2015

● Assessments have had a tremendous amount of positive feedback

▲ Allows face to face meetings with FCA and carrier to improve our business relationship

▲ Provides the ability for the carrier to understand what’s important to FCA and to review

internal processes

▲ Provides the carrier the forum to communicate any concerns or potential process

improvements

▲ 15% on average scorecard improvement for carriers that have had an onsite

assessment

Minimizing Variability

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North American Supplier Locations

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Managing Variability

Increasing variability for resulting cost efficiencies

Increased use of rail/ Intermodal

Partnership in consolidation

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Pricing Trends

Measuring Performance- Fundamentals

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Statistics 101- Mean and Standard Deviation must be tracked

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Sustainability Report Inbound Transportation Year-over-Year Performance

2013 2014 2015

Truck 226,000,482 280,892,435 264,994,830

Percentage 60% 61% 56%

Rail/ Intermodal 226,000,482 179,193,303 205,978,974

Percentage 40% 39% 44%

Annual Miles

Improved service levels (e.g., decreased variation)

from Railroads and Intermodal Carriers facilitate cost

savings without degradation in customer service

2016 FCA Sustainability Report

Managing Variability

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Robust Networks

Strong Partnerships

Variability cannot be eliminated

● Visibility (measurement) improves the ability to manage

● Filtering through the data for meaningful indicators

Managing Variability

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Operational exception based reporting

Data analytics for demand planning

Further integrated S&OP processes to drive the business

Enhanced scenario planning

Flexibility

Responsiveness

Managing Variability

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The Red Queen

Backup

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Quotes

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“The line between disorder and order lies in logistics…” - Sun Tzu

“My logisticians are a humorless lot … they know if my campaign

fails, they are the first ones I will slay.” - Alexander the Great

"Gentlemen, the officer who doesn't know his communications and supply

as well as his tactics is totally useless.“ - Gen. George S. Patton, USA

Proprietary and Confidential 2

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