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The case of Greening Donald exemplifies Autoliv s collaborative approach with its suppliers. Based in Ontario, Canada, Greening Donald makes wiremesh filters for airbag inflators, a key component for Autoliv s products. Autoliv is Greening Donald s biggest customer, but Skinner s team did not use its market clout to dictate the terms of a new relationship with this
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AUTOLIV PROFILE: Applying Rocket Science to the Supply Chain
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supplier. Instead, it proposed a collaborative effort that has paid off handsomely for both companies. When I first heard that my big customer was going to send a supplydevelopment group to help me run my shop, it wasn t something that I was really looking forward to, says John Rosbottom, production director at Greening Donald. But now I have nothing but good things to say about it. Skinner s team helped Greening Donald move from a large-batch production model to a small-batch model and establish standards for every connected process in the production line. A system using cards, or kanbans, to pull product through the process was instituted. Within just 14 months of accepting Autoliv s offer to help optimize its production process, Greening Donald cut its scrap volume in half and reduced its inventory of finished goods by 30 percent. Of all the companies I have ever visited that claimed to be running a lean manufacturing system, Autoliv is by far and away the most impressive, Rosbottom says. The way that they came to us, understood our processes, and helped us improve the flow of products throughout our facility has really paid off. The Greening Donald example has been replicated, in varying degrees, with many of Autoliv s biggest suppliers. To further support and enhance collaborative efforts with the supply base and to smooth the interfaces along the supply chain, Autoliv rolled out a new Web-based tool in 2002 called the Autoliv Partner Portal. The portal gives its suppliers visibility to all Autoliv s purchasing requirements, standards, production forecasts, terms and conditions, and the status of materials flowing along the supply chain.
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From start to finish, including the modest efforts at reform before it turned to Toyota for help, it took Autoliv nearly ten years to fully transform its manufacturing and supply systems. Because of the organizational learning it internalized from that experience, it is helping its suppli- It took Autoliv nearly ers improve at a faster rate. But senior management at Autoliv is quick to point out that ten years to fully change of this magnitude is very hard to transform its achieve and requires complete and active support from the entire organization. It can t manufacturing and just be an edict, Markert says. A company supply systems. has to be willing to invest in a comprehensive
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plan that s local at each site to develop and train the people and put the systems in place. Autoliv invested millions of dollars and thousands of staff hours in training and organizational development to support its movement to the APS. Furthermore, the initiative is never really over, Markert says. Autoliv is always pushing its people and systems to improve. The company encourages employees to suggest changes and pays a cash bonus for suggestions that improve a process. We have a lot of open-ended programs where folks come together and work on improvement opportunities. One of our key metrics in human resources is the number of suggestions for improvements that employees put in, Markert says. Then the trick is to have a structured process to identify what the best practices are and programs to spread those best practices throughout the organization.
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Core Discipline 2: Develop an End-to-End Process Architecture
any major construction project, your supply chain improvement efforts need a blueprint to succeed. Without a blueprint, you won t be able to envision how the many pieces fit together within the existing infrastructure to form an integrated whole and you ll encounter delays, rework, and escalating costs. In supply chain management, that blueprint is your supply chain architecture. (See 6 for an understanding of the essential features of an all-encompassing roadmap to change.) Your supply chain architecture details the process, applications, and information needed to improve and evolve your supply chain. It integrates rules about the process relationships between business entities and ensures alignment between process and supply chain infrastructure (information technology and physical assets, such as warehouses, factories, etc.). Companies with supply chain architectures in sync with their business goals have better overall business performance. Their supply chains are fit for purpose. They re easier to implement and operate. And perhaps most important, they can be reconfigured quickly as business needs change a valuable source of competitive advantage (see Figure 2-1). Let s now focus on the process architecture, which includes four primary components:
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