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News and Views
  - August 26, 2004 -  
     
Chrysler’s Supple Supply Chain  
 

CIO magazine has been running a series on companies with “agile” supply chains – the ability to respond quickly to changing needs and requirements both in real time and over time. This piece highlights how Chrysler has used IT to increase agility, and suggests some overall principles for companies to consider.

What defines agility? Fast and flexible, for sure, but also transparency – “Managers can ‘see into’ systems and, when necessary, make ad hoc adjustments that keep manufacturing and delivery processes aligned with customers' needs and their own bottom line.”

A few of the keys:

Look beyond the shop floor: Agility isn’t just achieved from internal operations, but by crafting agile relationships with suppliers. Chrysler, for example, has knitted together a variety of information sharing and collaboration tools for its suppliers, including web-based transaction processing, and an “Integrated Volume Planning” application that shares sales and forecast data back through the supply base, and collaborative design tools.

Share lots of data: Break down the cultural and related barriers to broadly sharing supply chain information with suppliers and distributors.

Put timely data to work: Take steps to capture and communicate more data in real time. More widespread use of mobile data collection devices can play a key role in improving data timeliness, and agile companies are adding event notification and response systems to take advantage of real-time data. Chrysler tracks something like 400,000 events/steps in its supply chain processes, enabling the company to synchronize delivery with suppliers in a just-in-time mode for 95% of its parts and assemblies.

Get close to your partners: It’s a two-way street – the information flow needs to be not only from your company to your suppliers, but from them back to you as well. The article cites a partnering effort between Boeing and GKN Aerospace, in which Boeing’s actual consumption is fed directly into GNK systems, dramatically improving its production scheduling and reducing overall cycle times. GNK states it has reduced inventories by 35% as a result of the effort. The system was a product of detailed discussions between cross-functional teams at both companies.

OK, this all sounds good – it also sounds very expensive. Chrysler’s systems were built over many years with automotive OEM IT budgets. Nonetheless, for the rest of us, I think we can take some steps to integrate the supply chain and increase agility that focus on the lowest hanging fruit to start, mapping cross-company business processes to look for opportunities, and use the internet to share information (there are many package products that do that today).

What do you think defines an “agile supply chain?” Is aggressive use of IT essential to increasing supply chain agility? Can the supplier integration efforts of the automotive industry provide lessons for other verticals?

 
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