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Order To Delivery: Supply Chain Transformation At General Motors Order To Delivery: Supply Chain Transformation At General Motors Order to Delivery Order to Delivery Dana Kovach Director, Global Strategy Order-To-Delivery General Motors Corporation Dana Kovach Director, Global Strategy Order-To-Delivery General Motors Corporation

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Page 1: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

Order To Delivery:Supply Chain TransformationAt General Motors

Order To Delivery:Supply Chain TransformationAt General Motors

Order toDeliveryOrder toDelivery

Dana KovachDirector, Global Strategy Order-To-DeliveryGeneral Motors Corporation

Dana KovachDirector, Global Strategy Order-To-DeliveryGeneral Motors Corporation

Page 2: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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The Supply Chain Transformation ChallengeThe Supply Chain Transformation Challenge

50 Countries of Operation

200 Countries WithGM Presence

70 Assembly Plants

8.6 Million Vehicles

$6 Billion Logistics Spend

50 Countries of Operation

200 Countries WithGM Presence

70 Assembly Plants

8.6 Million Vehicles

$6 Billion Logistics Spend

$105 B Material Purchase Spend

72 Product Programs

20 Vehicle Lines

11,931 Product Suppliers

10,000+ Dealers

69 Transportation Providers

$105 B Material Purchase Spend

72 Product Programs

20 Vehicle Lines

11,931 Product Suppliers

10,000+ Dealers

69 Transportation Providers

Page 3: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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What Are the Key Trends Driving Change in the Automotive Supply Chain ?

How Is General Motors Responding ?

What Is the Impact on Our Business?

What Are the Key Trends Driving Change in the Automotive Supply Chain ?

How Is General Motors Responding ?

What Is the Impact on Our Business??????????

Page 4: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

What Are the Key Trends Driving Change in the Automotive Supply Chain ?What Are the Key Trends Driving Change in the Automotive Supply Chain ?

Customers Are More Demanding

Competition Is More Intense

Emerging Business Technology Impacting Traditional Models

Customers Are More Demanding

Competition Is More Intense

Emerging Business Technology Impacting Traditional Models

Page 5: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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150 Million People In The U.S. Accessthe Internet

They Spend 10 Hours Online Each Month

Majority of Car Buyers Research Their Purchases on the Internet

150 Million People In The U.S. Accessthe Internet

They Spend 10 Hours Online Each Month

Majority of Car Buyers Research Their Purchases on the Internet

The Internet Has Allowed More CustomersTo Have More Knowledge Than Ever BeforeThe Internet Has Allowed More CustomersTo Have More Knowledge Than Ever Before

CUSTOMERS ARE MORE DEMANDINGCUSTOMERS ARE MORE DEMANDING

Page 6: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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COMPETITION IS MORE INTENSECOMPETITION IS MORE INTENSEMore New Products Are Being Brought Fasterto Market

Continuous Improvement in Quality With Simultaneous Reduction in Cost

Stream of Technological Development by Manufacturers, Suppliers, and Non-Traditional Competitors

More New Products Are Being Brought Fasterto Market

Continuous Improvement in Quality With Simultaneous Reduction in Cost

Stream of Technological Development by Manufacturers, Suppliers, and Non-Traditional Competitors

Cadillac NightVisionCadillac NightVision

Page 7: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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EMERGING BUSINESS TECHNOLOGY IMPACTS TRADITIONAL BUSINESS MODELSEMERGING BUSINESS TECHNOLOGY IMPACTS TRADITIONAL BUSINESS MODELS

Rapid Cycles of Change

Cross-Functional Integration Required

Extended Enterprise Information Visibility

“SENSE & RESPOND”!!!!!!!!!!

Rapid Cycles of Change

Cross-Functional Integration Required

Extended Enterprise Information Visibility

“SENSE & RESPOND”!!!!!!!!!!

Page 8: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

How Is GM Responding ?How Is GM Responding ?

Page 9: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

The Customer is in ControlThe Customer is in Control

GM Is: Moving From Manufacturing-Focused to Customer-Focused,

Moving From Batch-Build to Sense-And-Respond, andLeveraging the Information Explosion to Achieve Operational Excellence

GM Is: Moving From Manufacturing-Focused to Customer-Focused,

Moving From Batch-Build to Sense-And-Respond, andLeveraging the Information Explosion to Achieve Operational Excellence

Page 10: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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What Does Customer In Control Mean?What Does Customer In Control Mean?

Customers Shouldn’t Be Forced to Compromise on Exact Vehicle of ChoiceCustomers Should Expect Fast Order Fulfillment Lead TimesCustomers Should Expect Reliable Delivery Promise Commitments and Real Time Order Status Visibility

MAKE IT EASY TO DO BUSINESS WITH GM

Customers Shouldn’t Be Forced to Compromise on Exact Vehicle of ChoiceCustomers Should Expect Fast Order Fulfillment Lead TimesCustomers Should Expect Reliable Delivery Promise Commitments and Real Time Order Status Visibility

MAKE IT EASY TO DO BUSINESS WITH GM

Opel CorsaOpel Corsa

Page 11: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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Creating and Leveraging New Tools and RelationshipsCreating and Leveraging New Tools and Relationships

Page 12: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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Integrating and Driving Operational ExcellenceIntegrating and Driving Operational Excellence

Design & Engineer

Design & Engineer

Purchasing/ PC&L

Purchasing/ PC&L

Manu-facturingManu-

facturingVehicle

LogisticsVehicle

LogisticsSell &

ServiceSell &

ServicePlanningPlanning

Order to DeliveryOrder to Delivery

Real Time Information Visibility/Transparency

CustomersSuppliersSuppliers

B2BB2B B2CB2C

OTD Drives a Transformation Across All Business Processes

OTD Drives a Transformation Across All Business Processes

DealersDealers

Rapid Customer Fulfillment

Page 13: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

What Is the Impact on Our Business?What Is the Impact on Our Business?

Page 14: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

Organizational TransformationOrganizational TransformationEliminate Silos and Create Common, Integrated Solutions

Across the Supply Chain

RailInterchanges

PlantsConsolidation

Centers and PortsVehicle and Parts

Distribution Centers Dealers

Suppliers

Supply Chain Visibility and Management

Customers

One Integrated Cross-functional Customer Focused Organization

Supply OperationsSupply Operations Order FulfillmentOrder FulfillmentLogisticsLogistics

Page 15: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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OTD CommonProcesses and SystemsOTD CommonProcesses and Systems• Supply Operations• Order Fulfillment• Logistics

• Supply Operations• Order Fulfillment• Logistics

Global OTD OrganizationGlobal OTD Organization

NorthAmericaNorth

America EuropeEurope

Latin America,Africa &

Middle East

Latin America,Africa &

Middle EastAsia

PacificAsia

Pacific

Page 16: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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Business Process & IT TransformationBusiness Process & IT TransformationConstraint Elimination Online Simultaneous Multi Tier Supplier Scheduling

Order Lead Time Reduction ProcessCustomer Demand Sensing

New Model Part Planning ToolOnline Distribution/Consensus Process

Order to DeliveryOrder to DeliveryCustomersSuppliersSuppliers

Real Time Supplier PerformanceMonitoring / MetricsReal Time Order Prioritization

Accessorization

Online CustomerLead Management

Online Vehicle Configurator

Online Dealer & Vehicle Locator

Supplier CapacityManagement Tool

Online Supplier InformationVisibility - SupplyPower

Total Cost Sourcing Tool

Real Time Outbound Distribution Visibility Vector 4PL Business Model Implantation

Product Delivery Date Commitments Outbound Logistics Network Redesign

OTD Cross-Functional Operating Organization Structure Inbound Logistics Network Redesign

Daily Order Scheduling & Sequencing WIP Inventory Management Improvement Tools

Assembly Plant Rapid OTD Enablers

Page 17: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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Business Results So FarBusiness Results So FarOrder Fulfillment Lead Time Reduced by 50%Parts Delivered on Time to Assembly LineStation: 99.8%Outbound Vehicle Shipped Damage Free: 99.5%Delivery Reliability: 85% Production and Material Constraints Reduced: 70%Inventory Costs Reduced by 16%Logistics Cost Reduced by 7.1%Headcount Reduced by 10%

Order Fulfillment Lead Time Reduced by 50%Parts Delivered on Time to Assembly LineStation: 99.8%Outbound Vehicle Shipped Damage Free: 99.5%Delivery Reliability: 85% Production and Material Constraints Reduced: 70%Inventory Costs Reduced by 16%Logistics Cost Reduced by 7.1%Headcount Reduced by 10%

Page 18: Order To Delivery: Supply Chain Transformation At General Motorsebusiness.mit.edu/sponsors/common/2002-AnnualConf/pres... · 2002-04-16 · Order To Delivery: Supply Chain Transformation

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Conclusions:Conclusions:

Customers Will Continue to Be Increasingly More DemandingProduct and Business Strategy Competition Will Continue to IntensifyTo Win: GM is on a Journey of Significant ChangeEffective Supply Chain Management (OTD) Will Continue to Be an Increasingly Important Differentiator

Customers Will Continue to Be Increasingly More DemandingProduct and Business Strategy Competition Will Continue to IntensifyTo Win: GM is on a Journey of Significant ChangeEffective Supply Chain Management (OTD) Will Continue to Be an Increasingly Important Differentiator