CROSSING OVERBuilding on its successes in integrating and streamlining supply chains within the South African automotive industry, e-business expert Collaborative Xchange (CX) is adapting the automotive model for use in the aerospace industry. Known as the Aerospace Supply Chain Improvement Programme, or ASCIP, the new venture was commissioned by the Department of Trade and Industry’s Aerospace Industry Support Initiative (AISI), and will be in pilot for the six months to May 2007. Its creation was inspired by the Motor Industry Supply Chain Competitiveness Improvement Programme (MISCCIP), commissioned in 2002 by the Automotive Industry Development Centre.

In recent years, MISCCIP has succeeded in mobilising the local automotive industry to bring together the disparate supply chains of the various roleplayers for greater efficiencies, cost savings and competitiveness, thereby enabling them to tackle the pressured global marketplace from a position of strength. As the brainchild of the Automotive Industry Development Centre (AIDC), “MISCCIP’s brief was to integrate and simplify supply chain processes and to ensure full visibility for all involved,” says Barlow Manilal, programme manager at the AIDC. “By replacing the various messaging standards with a single, ‘any-to-any’ message switching system for the entire industry, we would enable more efficient order-to-delivery processes, and realise greater downstream efficiencies in areas like production planning, supplier forecasts and stockholding.” It now offers full supply chain visibility to every industry player, irrespective of their core IT systems, leading directly to its successes being sought out by the aerospace industry.

SIMPLE IDEA, COMPLEX EXECUTIONThe concept in both industries is simple enough, says Peter Leppan, general manager of CX. There exists a tangled web of ordering and

fulfilment relationships between the industry’s original equipment manufacturers (OEMs) and the OEMs’ suppliers – first- and second-tier providers of components and sub-assemblies. Every supplier and OEM runs a supply chain and messaging platform unique to that company, whether electronic and integrated with enterprise backend systems, a combination of automated and human workflows, or even paper-based flows, augmented by e-communications like e-mail or fax.

Each supplier, logistical service provider (freight and forwarding companies) and OEM in both industries has relationships with one or several of the other types of players. In automotive for example, this could see OEMs like BMW, Ford, Fiat, Nissan or Daimler Chrysler SA ordering supplies from any permutation of Feltex, Behr, Dorbyl or hundreds of others. “It used to be the case that for every new relationship, a new supply chain was purpose-built,” says Leppan. “But because each differed in many subtle ways, the resultant industry-wide supply-chain complexity was wasteful, requires excessive maintenance, and put local operators at a distinct cost disadvantage when competing against their international counterparts.”

The remedy was MISCCIP, and all eight local automotive OEMs and over 270 local suppliers now use the single, integrated supply chain management platform. The benefits to all have been immense. “MISCCIP has given us a single, secure and automatic clearing house for electronic data interchange with all the automotive manufacturers,” says Gary Hollins, IS manager for Feltex Automotive. “It has removed the need for us to program our systems for each individual OEM’s unique data format requirements. Collaborative Xchange knows our data formats and those of the OEMs intimately, and can bring them together in communications between the OEMs and us so much more quickly.”

The logical next step was to extend the experience gained through MISCCIP to other industries.

Since its inception in 2002, the Motor Industry Supply Chain Competitiveness Improvement Programme (MISCCIP) has been influential in strengthening South Africa’s automotive supply relationships. Now this locally developed e-business platform developed by Collaborative Xchange (CX) and managed by the AIDC, is aiming to provide a similar supply chain benefits to the aerospace industry.

AeRoSPACe, tHe NeXt FRoNtieR

178 THE E-BUSINESS HANDBOOK

GREAT EXPECTATIONSBased on MISCCIP, great efficiencies and cost savings were envisaged from the integration of aerospace supply chains locally and internationally. This is real e-business, which promises transparent workflows across corporate boundaries and in turn paves the way for applications like MISCCIP and ASCIP to give absolute insight into correct stock levels and enable just-in-time manufacturing and supplier forecasting.

When the Department of Trade and Industry established AISI, they approached the CSIR and CX to undertake the project. Chanel Schoeman, programme manager for ASCIP at the CSIR explains: “Like MISCCIP, ASCIP seeks to create a Web-based supplier portal for South Africa’s aerospace industry, providing a central message switch and standard trading and communications channels. The ultimate aim is also the same – creating greater supply chain visibility that will ultimately increase the industry’s global competitiveness”

The pilot phase saw the roll-out of the solution at local OEM Aerosud and 16 of its suppliers – including five local BEE companies, eight other local suppliers and three international suppliers. The solution envisaged inbound and outbound supply chain electronic data interchange functionality for all involved. Suppliers would receive purchase orders, send acknowledgement of receipt of orders, perform status updates, send advanced shipping notifications and receive ‘goods received’ notifications. The end goal is for an extended industry roll-out to suppliers like Saab Grintek, Reutech and Altech, and OEMs like Denel, ATE and others, provided the transaction volumes justify it and industry participation becomes a reality, says Schoeman.

BIG AND SMALLJohan Steyn, managing director of Aerosud Interiors, a division of Aerosud, says that when Aerosud saw what automotive was doing, they wanted a similar standard too. The need was dire, as purchase order releases from Aerosud and proof of receipt by suppliers was critical for supply chain management. “The aerospace industry supply chain is long, with up to 120 days from raw materials supply to manufacture. Before ASCIP, supply chain efficiency depended on forecasting tools and strict adherence to supply chain rules. We wanted a better audit trail, to close the communications loop”, explains Steyn.

According to Schoeman, most OEMs have fully integrated supply chain systems, but many suppliers don’t. ASCIP is therefore a highly attractive proposition to managers, not only due to the perceived business benefits, but also due to the ease and speed of adoption, with small suppliers only requiring Internet access. “Orders enter the system automatically from Aerosud, and suppliers can see them on the Web interface and get automatic e-mail notification. This means orders are resolved quickly, and there is better tracking. The portal will also carry OEM feedback, something that has been lacking before.”

FIRST SUCCESSESLeppan of CX concludes: “The main thing is to get collaboration across the entire industry, not just of one or two players. Many solutions can be hung off an exchange like MISCCIP or ASCIP once you have critical mass. We have reached this point in the automotive industry, so the

trick there is to continue delivering new solutions that contribute to the continued success and competitiveness of the industry. For aerospace, there is still some way to go, but we anticipate tremendous growth. But depending on volumes, efficiencies and the right charge-out models, this venture will contribute immensely to both the global competitiveness of local OEMs as well as the empowerment of smaller suppliers, and will ultimately benefit the entire country.

case | study

miSCCiP ReviSiteD• Adopters of the system have extended it to second-tier suppliers and

international OEMs.• MISCCIP receives vehicle tracking signals from three OEMs along the

production line.• Some suppliers and OEMs are adopting international communications.• A number of local suppliers are transacting electronically with

international customers.• Some OEMs require that suppliers print labels and attach them to

components they ship, but label requirements differ among OEMs. CX allows printing of OEM-specific labels, which in some cases are required to tie up to ASNs sent by suppliers, allowing automatic scanning into stock.

• RFID is a strategic future direction, and is in pilot involving Chep, UTi, BMW, CI Shurlok, CX and the AIDC.

• Reporting and alerting functionality provides an exception-based solution to supply chain problems.

• Some first-tier suppliers are adopting MISCCIP processes between themselves and their second-tier suppliers leading to extended visibility, savings and efficiencies further down the supply chain.

• E-waybills will reduce manual and duplicate processes and further improve visibility and data quality to benefit LSPs. It will also help suppliers reduce manual capture and recapture of information.

• An affordable and easily deployed hosted ERP solution is being investigated.

• Some suppliers are pushing for MISCCIP’s extension to the parts and accessories business. This is currently in place with GMSA and being reviewed by Nissan and Ford.

• News functionality allows OEMs to post events to suppliers• Discussions are under way on ways to adopt invoicing in MISCCIP. With the

release order, ASN and GRN all part of the process, the ability to perform a three-way match already exists. Moving this into an ability to raise invoices based on what OEMs received should see a reduction in the number of credit notes, payment administration and the time taken to pay.

• MISCCIP is finalising local and international OEMs supply chain integration.

Tel: 011 523 4813

Fax: 086 521 3455

E-mail: peter.leppan@cxchange.co.za

URL: www.cxchange.co.za

Peter LeppanGeneral Manager

Tel: 012 564 5250

Fax: 012 564 5301

E-mail: bmanilal@aidc.co.za

URL: www.aidc.co.za

Barlow ManilalProgramme Manager

179AN ITWEB INFORMATICA PUBLICATION