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Supply Chain Optimization A Global Automotive Manufacturer Abstract As the North American vehicle market demand decreased for a major OEM, company leadership was under pressure to place their long-term business into a smaller number of strategic supplier locations. The goal was to ensure the longer-term viability of these suppliers as partners to the OEM as well as to minimize raw material and finished part logistics costs. Challenge The decreasing product demand levels were driving reductions in plant asset utilization for core OEM suppliers. The OEM had sourced in excess of 250 commodity-specific suppliers to support its North American vehicle production and felt a sizable reduction in that number was required. TPS worked in tandem with the OEM to determine which suppliers were the best performing and lowest cost, therefore best aligned for future OEM programs. The eventual reduction in the numbers of suppliers provided a short-term cost impetus as well as long-term sustainability. Execution TPS developed a supplier database encompassing all OEM vehicle programs, purchasing contract terms, and geographical alignment to assembly facilities. Every supplier was analyzed based on product volumes, complexity and the duration of time their programs were set to run into the future. TPS reported the results of the analysis to the OEM so that a business case could be established on each supplier under review. The final analysis included the supplier’s current operational and financial performance.

During the second phase of the optimization project, teams were engaged to physically analyze OEM-owned production equipment and in-house supplier tools that were scheduled to be phased out. At the same time a separate team was deployed in order to analyze each retained supplier. We reviewed their production equipment and assets; niche processes and their performance in these areas to better understand the extent of their current capabilities. The supplemental information collected was used to establish resourcing priorities. Result Each of the “grow” suppliers were awarded enough transfer business to ensure volume and profitability over the next 24 months. The OEM generated a major reduction in transportation costs as well. This resulted in a 48% reduction in the size of the supply footprint across the commodity for the OEM.

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Decommissioning and Launch Management A Global Automotive Manufacturer Abstract A large allied automotive supplier had become an economic liability for a major original equipment manufacturer. TPS’s Managing Director was tasked with decommissioning this tier 1 supplier and relaunching all the current production with seven new suppliers. The recommissioning cycle had to be completed within 12 to 16 weeks from the tool and equipment move date. Challenge The decommissioning work involved two facilities that produced 3,000 production and service assembly part numbers as well as numerous specialized additional components. The team was also assigned the task of launching these products in a cadence with 7 new suppliers worldwide. It was imperative that the start date for the takeover suppliers’ production be timed with the depletion of the original supplier's banked material. Project leadership was given 7 months to bank all components and assemblies in addition to decommissioning the two original plants. Execution Our Managing Director developed a staged banking plan encompassing all variations of assemblies and components. These re-launches were timed by component and assembly part numbers to ensure banked materials were consumed and process validation was successfully completed. After supplier PPAP work was complete, PTR’s were done on every assembly in each of the applicable auto assembly plants. Once all tasks were complete, the new suppliers entered into steady state production from their newly validated production processes.

The new supplier’s production locations had undergone capacity and constraints analysis. In many instances new molding machines had been purchased and installed in anticipation of these business transfers. Other suppliers receiving business transfer tools had open floor space for used equipment. The project team was able to broker deals between the exit supplier and the new suppliers for used equipment. The transferring IMM’s and other equipment was moved along with the tooling in many instances.

Tools were transferred in most cases, many tools required bolster plate additions and modifications so they could run efficiently in the new supplier’s equipment. The product launches were staggered, the plan was to start production on products by family, allowing 6 weeks between families at each new supplier location. This allowed the new suppliers to work through their launch issues product by product without their resources being over taxed. Result The project was completed on time and utilized only 30% of the allocated budget. There were no disruptions to schedule from the takeover suppliers, as all products were again launched without issue at more than 20 customer assembly locations.

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Operations Intervention A DoD Manufacturing Company Abstract A Department of Defense (DoD) manufacturing company awarded a major DoD contract was unable to meet their vehicle build schedules inside a number of their assembly plants. The problem was identified as being caused by a number of component and assembly shortages coming from several key production tier 1 and 2 suppliers. TPS was brought in to several strategic supply locations to identify the causes of the delivery problems, enact corrective actions where required, and eliminate the production schedule disruptions. Challenge

  • The Assembly plants were frequently minutes away from shutting down production due to the lack of components.
  • TPS was to identify all issues impacting the focused supplier’s ability to deliver product on schedule and develop corrective actions around these problems.
    - Many suppliers in the value stream had been given unclear deliverables.
    - Many suppliers were not producing parts that met design intent.
  • TPS was to assist the supplier’s in developing quality and production processes that would ensure production volumes and quality requirements would be met going forward.


  • Implemented an interim product containment process for several suppliers to ensure the manufacturer did not experience plant interruptions with the associated components.
    - Drove changes to manufacturing processes that significantly improved both output
      and first-time quality.
    - Established communication between the suppliers and the assembly plant.
    - Developed a production shipping schedule that met the requirements of the
      assembly plant as well as for the tiered suppliers.
    - Developed and implemented proper quality/production metrics including an
      effective tracking system.

Result Within two weeks sub supplier issues were stabilized, the supply of on-hand material began to increase, and production build schedules were met and maintained. The on-hand inventory of good material at the assembly plant for these focused suppliers increased from less than one day when TPS was engaged to almost five days after working with these suppliers for four weeks.

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